Credit Building and Parenting: Common Misconceptions

American kids are spoiled says the U.S. Department of Agriculture. According to their study, parents will spend more than $12,000 a year on each “average” child. For the well-off or just-plain-spoiled, parents are doubling that cost.

What’s wrong with this picture? Many would argue that providing their kids with a comfortable lifestyle is completely normal. No matter your budget or earning power, teaching your kids about money is imperative when it comes to raising responsible adults. Consider the following misconceptions and ask yourself if you’ve ever used these phrases.

1. “Our kids shouldn’t have to worry about money.”

No, they shouldn’t. Your kids should never need to worry about how much money you earn, how much debt you have, or whether you are financially stable. That said, teaching your kids to become financially-conscious is not the same thing as “worrying” them. On the contrary, learning about money and savings will help them establish:

• Good habits.

Children learn by doing. Everything from table manners to riding a bike requires practice; why should money be any different? Instilling positive habits early means teaching your kids the value of a dollar, how to save, and when to spend.

• Confidence.

Many credit-building mistakes are made in the absence of education. Put simply: some people don’t understand money management. When a person grows up without financial experience, they are more likely to make mistakes and second-guess themselves in the future. On the other hand, those with a firm grasp of the subject are more likely to spend responsibly and make wise, deliberate decisions.

• Common sense.

Rationalization is the demise of many credit reports. For example, “I can afford a new car. I’ll just work hard and ask my boss for a raise next year,” or, “I deserve a vacation. Who cares if my credit card balance is high?” Unless you want your kids to wander through life without a safety net, you’ll teach them a common-sense approach to financial stability.
The bottom line: knowledge doesn’t equal anxiety. Give your kids the power of education and let them learn the basics at an early age.

2. “Childhood is a fleeting time; our kids deserve to have fun!”

Who says learning about money can’t be fun? Think back to your childhood and remember the thrill of earning a weekly allowance or finally saving enough money to buy that coveted toy or video game. Education is not without reward. Allow your kids to make their own decisions about money and guide them toward a sensible mindset.

3. “Working is something best saved for adulthood.”

Adulthood isn’t what it used to be. Kids are feeling the pressure of success and competition at an early age. While we’re not suggesting that you push your youngster, encouraging a paper route, babysitting gig, or extra chores could help them learn the value of money. Consider the following example:

Pre-teen Anna has been begging her parents for a pair of trendy shoes for the past three months. Seeing this as a learning opportunity, Anna’s parents allow her to earn the shoes by doing extra chores around the house and babysitting her younger brother. After a few months of saving, Anna is finally able to buy the coveted shoes. While other footwear lies in a pile in her closet, the trendy shoes always remain in their box.

Not only did Anna learn how to save money, she learned to appreciate the things she earned.

Credit repair can be an uphill battle for those who lack the ABCs of financial education. If you’re hoping for well-rounded and responsible children, expose them to the basics now. What have you got to lose?