If you’re trying to raise money-smart kids, providing a good model for them to follow is one of the most powerful things you can do. But setting a good credit example is tough – after all, teachable moments are hard to come by!
Don’t worry: The Nerds identified a few opportunities to teach your kids about building credit that you may not have thought of. Take a look at the details below and get started today!
1. When you’re filling out the family’s monthly calendar
To help keep track of schedules and activities, most busy families have a calendar that’s prominently displayed somewhere in the home. It might sound strange, but the monthly task of filling out the calendar is a great time to teach your kids an important, credit-related lesson.
The next time you’re marking your calendar with soccer practices and piano recitals, think about adding in the due dates of your monthly bills. Then, follow through with crossing off each as you pay it. This will show your kids that making timely bill payments is an important priority. Since payment history makes up 35% of our credit scores, the example your kids will take away is likely to have a big impact on their future credit scores.
2. Swiping your credit card for a big purchase
The next time you’re using your credit card to buy a TV or a home appliance, use your card. Use this as a jumping-off point to teach your teen about the importance of spending responsibly with credit cards.
The key point here is that rolling a balance from month to month is a dangerous habit to get into, and that credit cards shouldn’t be treated as extra income to buy the stuff you want. Point out that credit card interest is expensive, and that charging too much can hurt your credit score. The important takeaway is that you’re going to pay off the big purchase right away – then make sure to follow through!
3. Swiping your credit card for a small purchase
If making a big purchases is a chance to get into detail about controlling credit card spending, small spends are a chance to talk about building credit.
Your child might be surprised to see you buy a pack of gum or a $10 fast-food lunch with your credit card; if so, point out that using a credit card carefully and consistently is a great way to build your credit score. Emphasize that credit cards aren’t dangerous, as long as they’re being used responsibly. This will help plant seeds of credit confidence in your child’s mind, which will empower her to make good choices in the future.
4. Your annual review of your credit report
Looking over your credit report is an annual chore that most people don’t enjoy. But if you turn it into an occasion, it will be less tiresome and teach your kids about the importance of the task.
The day you plan to review your credit report, order a pizza, pour a few sodas and call the family together to join in on the activity. While you’re enjoying the meal, explain the document you’re looking at to your kids and discuss why you’re scrutinizing it so carefully. Let them see the report and ask questions if they have them.
When you’re finished, head out for a movie or a round of mini golf together. This approach will simultaneously introduce your kids to what a credit report is and show them that checking it is nothing to be intimidated by. Plus, you might start a new yearly tradition to look forward to!
5. When you’re turning down a retail credit card
At some point, your child will see you get offered a retail credit card at the checkout line. When you turn it down, use the opportunity to make it clear that it’s only a good idea to apply for credit you actually need. Follow up by explaining that doing otherwise can hurt your credit (new credit inquiries count for 10% of your score) and make it hard to keep track of your finances.
The bottom line: It may not seem like it, but there are a lot of opportunities out there to set a good credit example for your kids to follow. Use our tips above, and you’ll soon find yourself surrounded by credit experts!
Kids and money image via Shutterstock
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