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, 2008 |
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Credit Wise Teens and Credit: Growing up in the Plastic Generation
For some
parents, teaching their kids about credit may inspire as many sweaty palms as
the birds and bees speech. Neither are easy topics to tackle but both are facts
of life. You may think that your kids will learn all about credit in school but
unfortunately most of you would be mistaken. Most schools do not extensively
cover the topic of credit in their teaching. If they do, a few hours of credit
training may not be enough to combat the deluge of credit card offers teens will
soon find in their mailbox or on campus. The best way for your teen to learn how
to manage credit responsibly is for you to talk openly and honestly about it. More...
According to Visa, plastic payments (either debit or credit cards) now account for 50.4 percent of spending among consumers 18- to 24-years-old. In fact, so many consumers in this age group are using plastic that Visa has dubbed them ‘Generation Plastic” or “Gen P”. While debit cards withdraw money directly from a banking account and do not allow accumulation of debt, credit card users don’t show many signs of slowing down. According to the Nilson Report, consumers used credit cards for $1.75 trillion in purchases in 2005. Yes, that’s trillion with a “T” (12 zeroes for us math impaired folks). It may come as no surprise that the age group with the fastest growing number of bankruptcies happens to be 18- to 24-year-olds. While some see the plastic trend as a
positive step, others would rather encourage use of cash. Some claim that using
plastic (even debit cards) desensitizes young consumers to using credit cards.
Whether you prefer cold hard cash or cold hard plastic, credit is a topic that
young people must be well-equipped to deal with. According to Nellie Mae, over
78% of college students have credit cards. One out of 10 carries a balance of
more than $7,800.00. That can be a huge amount of debt for a young consumer
trying to squeak by on a student’s budget. With so many issues facing teens
today, stress over debt doesn’t have to be one of them. Even though it is possible to recover from
bad credit, it can take a while. Most account activity stays on a credit report
for 7 years. According to the Unless you have enough money to pay cash for a house and car, most people will need to rely on credit at some point. Give your kids the tools to handle their credit responsibly and make good choices regarding their financial future. Here’s how to start them out on the
right track:
While we may not be able to save our children from every
financial woe that they will ever face, it is our job as parents to prepare them
for life in the real world. Avoiding credit for life is probably not realistic
so teaching kids to handle credit well, make responsible decisions, and save for
things they want will give your kids the information they need to survive
financially once they leave the nest.
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Copyright © 2006 by Jennifer Delcamp. All rights reserved. Want more money-saving tips? Get a FREE Subscription to our monthly newsletter!
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