Should you give credit cards to your kids? Well, to be honest with you, my oldest son will turn eight years old this year. Hence, this problem is a distant one for me (at least for now). What I have friends who have teenage kids who will be in college in a couple of years. Once, they are in college, most will be able to get their own credit cards since lots of credit card issuers offers college students relatively easy these days.

This is how I would like to look at it. First, let’s look at the pros and cons of giving your teenagers a credit card.

First, the pros :

1. You start to educate them early about credit cards and how they work.

2. If you give them a supplementary credit card (not debit card), you can start them on the road to building a credit history. (that is assuming you have a good fico score).

3. If you are afraid of get going crazy on the card, you can get them a debit card and set a budget for them.

Here is where I see the downside to this :

1. If you have not educated your teenage kids on money, and you do not monitor their spending, then you will be spoiling them by giving them a credit card.

2. Access to “easy money” could be a bad thing for some.

Teach Your Teenager the Following Before Giving Them a Credit Card

Before I give my teenage kid a credit card, I would definitely be educating him or her about how credit card works. This is what I would tell my kids before I give them a card.

1. Teach about FICO score and how important they are to their financial lifes.

2. Explain to them the concept of credit and why they should always pay in full.

3. Do some math revision and explain to them what is apr! If you know, try explaining to them how to calculate the real effective interest rate to them if they are good in calculas.

4. I will make them plan a spending budget and make sure they stick to it religiously.

5. Lastly, I will monitor the spending on the credit card.

My oldest son is now 7 years old and Mrs Credit Card and myself have started to think about educating him about the value of money. Our aim is to instill discipline in him and to educate him that money has to be earned and spent wisely. This is what we have done.

We give him a weekly budget. But we only him to buy lunch from school twice a week. It is on those days that he chooses. Here are also several things we have done.

1. Explain why we do not want him to buy food from school everyday (cos he does not finish them most of the time). We take the time to explain that the prices charged for certain food offers little value and that Mommy can cook a better dish at lower cost!.

2. Insist that he save most of the weekly allowance we give him and we ask him how much he has saved every week.

3. Encourage him to save for things that he wants to buy.

4. We tell him that he cannot buy something unless he has saved enough. This we think is one of the most important lessons we want him to learn. I think many people have got into credit card debt trouble simply because they never had the concept that “you buy only what you can afford”. It’s pretty elementary, but we want to make sure he understands this concept.

5. One thing have not done and will not do is to reward him for doing household “chores”. We feel that it is his duty to clean his room and help with the household stuff and that he should not be expected to be “paid” for this.

I was thinking of making him to a little “spreadsheet” every week to highlight what he has spent, how much he has saved and how much does he have at the moment. But we both felt that we should hold that off for a while, perhaps until next year. Educating our kids about finances is something both my Mrs Credit Card and myself will do because it can only be taught at home. Schools do not teach them. I will periodically update all of you of our process and observations.