The Importance of Teaching Kids about Credit: A Guide for Parents
Teaching children financial literacy can be a difficult task for both parents and children. However, thanks to numerous innovations, a system of children’s debit cards was designed that will teach children all aspects of financial literacy while acquiring various skills through activity and obligation tables.
Children must know how the world of finance works, credit, which debt is good and which is not, the difference between a savings account and a checking account, as well as the possibility of investing in various types of stocks.
Many experts advise that the finding the best kids debit card option is the fastest and best way to teach children how the financial world works.
An important difference between needs and wants
One of the basic things that children must learn is to distinguish between needs and wants. Expenses that are counted under needs are payment of rent, bills, purchase of groceries, mortgage, fuel for the car, and numerous other expenses that appear unplanned during the month. Therefore, when parents pay all the necessary expenses, they have very little money left for their wishes. Parents can fulfill their children’s wishes when they deserve it.
Get them a kid’s credit card
This innovative way is designed to bring children closer to the world of money. With this option, children have the option of choosing between creating a savings plan, spending, earning, investing in shares, and donating money to the needy. The option of donating money to charities is designed to develop a sense of social sensitivity in children and to encourage them to donate money to those who need help the most.
It also offers tables of obligations and activities that parents can adapt to the needs of children of all ages. Activity tables are usually filled with household chores and extracurricular and curricular activities. Children must fulfill the assigned obligations within the previously agreed upon period by the parents. In this way, children will be sanctioned or rewarded based on their efforts.
Benefits
Numerous studies have shown that children who are taught financial literacy with this tool become financially independent adults without debt and the stress of it. Therefore, you should not be surprised by the attention that this option has caused and at the same time the relief for both parents and children.
The difference between a checking and a savings account
You need to explain to the children the difference between a checking account, a savings account, investments, debts, and building credit.
Savings account
The savings account is intended for children of all ages, where parents can open an account on behalf of the children and deposit money for savings. The money in the savings account can be used for education, buying your first property, travel, a car, or something else. What is of crucial importance is that the children have their own goals that will motivate them to save money to fulfill them.
Checking account
The checking account is intended for slightly older children, usually teenagers, who are ready to step into the world of adults and bear their financial expenses and obligations. Here, the parent or guardian opens an account in the name of the children.
Positive and negative debt
There is an important difference between good and bad debt. Building a credit rating is not at all a simple process, if you are in debt to the right extent, your credit rating will increase as long as you fulfill your monthly obligations and pay everything on time.
Encourage them to invest
The only way money can double or triple is through investment. Thanks to debit card applications, children have the opportunity to invest money in different types of industries, companies, and brands. Children can follow the state of stocks at any time to see whether stocks rise, fall, or stagnate.
Over time, it is desirable to encourage children to invest in different branches of industry, thereby enriching their knowledge and portfolio. Over time, children will begin to research and invest in companies on their own according to their assessments and wishes.
Here, if you are a parent, you should support them, but not influence their choice with your opinion.
Conclusion
It is of crucial importance that children become responsible and financially independent adults. Therefore, the sooner you start introducing children to the world of finance, the sooner children will form a habit that will eventually develop into an incredible skill. In this way, you can protect your children from unnecessary debt and stress that finances can cause.
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