Teenagers, Money, and Credit

It is never too early to teach children the importance of having a budget, setting goals,  and how to save money.  You can start with a piggy bank saving pennies and allow them to use part of those coins to purchase something they have had to work for and save for.  This will teach them how to work and save for things they want and the value  and rewards of doing so, versus always expecting things to be given to them. 

This will also prep them for becoming financially responsible teenagers and adults.  The teenage and college years are the best time for parents to help their children create financial goals, work ethics, and start building their credit. 

There are a number of ways to help your teenager or college student learn to manage their money and build credit.  First is start them out with a savings account.  Once they have learned the fine art of keeping track of deposits and withdrawals you may want to check into getting them a checking account.  Preferably one without the use of a debit card at first.  This will allow them to learn the importance of book keeping and paying bills.  Then if they show responsibility with a checking account allow them a debit card. 

Since they will not be building much credit if they do not have any bills or loans in their name the best way to help them build credit is to get them a credit card with their name on it.  There are a number of student credit card offers out there that specialize in helping students build their credit.  There are also prepaid credit cards that allow them or others to deposit money in their account so they do not rack up a bunch of debt by using their credit, and thereby defeating the purpose of a credit card to build their credit.  Make sure if you use a prepaid credit card that you go with a company that will report to the credit bureaus  (not all of them do).

Another option that will help them build credit is instead of either purchasing their first car for them or putting the loan solely in your name add them to a loan so by making monthly payments and paying off a loan they will be building credit so by the time they need student loans or are out of school and need to get into an apartment or house or are ready to make a larger purchase like a car they will be able to do so independently.