August 15, 2008
Forget the birds and the bees: One of the most difficult – yet most important – discussions you can have with your children before they head off to college concerns the financial facts of life. Because a few early financial missteps can damage their credit for years to come, it's important to set your kids out on the right path.
Banking 101. If this is the first time your kids have been responsible for managing more than a weekly allowance, teach them the importance of tracking their financial transactions. Start with tips for properly managing checking accounts:
Ease into credit cards. Using credit cards responsibly helps build a solid credit history, which your kids will need later in life. But credit is essentially a loan that must be paid back, so urge them to tread carefully:
Look forward. Before you know it, your kids will graduate and start careers. Don't let them start out with damaged credit that'll take years to repair. This means avoiding making late payments, bouncing checks, opening too many accounts, exceeding credit limits and accumulating too much debt. All these missteps can lower their credit score and make it difficult to borrow money for a house or car, rent an apartment or even get a job.
To learn more about understanding and building strong credit scores, have your kids visit What's My Score (www.whatsmyscore.com), a financial literacy program for young adults run by Visa Inc. It features a comprehensive workbook called Money 101: A Crash Course in Better Money Management, which can be downloaded for free.
Your kids are about to enter the most exciting period of their lives. Make sure they do so with their eyes wide open about the importance of sound personal financial management skills.
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