07-15-2010 04:10 PM - edited 07-20-2010 11:32 AM
While there are very few things we all agree on in this community, it’s probably safe to say that just about everyone agrees that teaching young people about personal financial management is essential if future generations are to avoid some of the pitfalls that brought many of us here to the FICO Forums in the first place.
Does your child have a credit card? How extensively have you discussed credit management with your child? Do you monitor their spending? Are you aware of how the recently passed Credit CARD Act of 2009 impacts the issuing of credit cards to young people?
As the new school year approaches, myFICO would like to hear from the FICO Forums community about the increasingly important topic of educating young people about credit management. Seeing how we have all been young and some of us rather stupid when it came to finances, I think it's also safe to say that we're all experts on this subject!
Please take our quick Back to School Survey and use this opportunity share your ideas, experiences, questions and advice in the discussion thread below. We'll share the results with you. And let me take this opportunity to thank all of you who continue to keep this wonderful community thriving!
How are you teaching your kids about credit? Do you monitor your kids' spending? What kinds of conversations have you and your kids had about credit?
07-18-2010 01:03 PM
Interesting survey, although the term "child" confused the issue for me.
I wish that the survey had separately addressed kids of high-school age and those who have graduated HS (or should have by now.) There are things I would have done with my younger kids, but I would never do with my older kids. As your offspring get older, your relationship with them begins to change, and you need to be treating them more as young adults and less like children.
Back when my three were in high school, we weren't really thinking much about credit at the time, but they had their own checking accounts (with me as co-owner), and they set records for OD charges from their refusal to seriously track their debit card usage. After getting enough acid comments from me about their undying faith in what the dial-a-balance told them they had in the bank but wasn't really there, they finally settled down. That probably helped form their attitudes about credit usage as well, because I did tell them that if they were as cavalier with CC's (once they got them), that their credit would quickly be shot. And I didn't pay off their OD charges, btw. Once they worked out how many extra burgers they'd have to flip to cover each $39 charge, it became much more real to them.
Once they were off to college, they were in charge of their bank accounts and their shiny new CC's. I didn't pry into their bank accounts, and sure enough, they got more responsible on their own. It took time, as do most things with young adults. They generally asked my advice if they were thinking of applying for a card, and they did wail at me if they missed a CC payment, and I made sympathetic noises with a minimum of I-told-you-so's. I also gave each a copy of Suze Orman's Young, Fabulous, and Broke, which did seem to filter into their heads. But I certainly wouldn't have done many of the choices that were listed on the survey (setting limits on their usage, checking on their balances.) The lenders seem to do that quite well on their own, lol.
So again, the question of whether I taught my "child" about credit really depended on their ages and the stage of our relationships.
07-20-2010 08:17 AM
I completely agree with having more mandatory classes in middle / high school for teaching how credit and money actually works.
At the same time, there will not a single financial lobbyist in DC that will convince any representative to push this. The dumber people are, the more money the financial sector makes.
07-22-2010 11:20 AM
I took the survey as if I had a college aged child. I answered yes to # 1, skipped # (I believe it was 3) because it said "if you answered no to #1, why?", at the end, I tried to submit...it wouldn't let me because that question required an answer. hmmmmmm
I think thatr q? needs an "n/a" as one of the selectable answers.
07-23-2010 07:04 PM
OK .... my kids are much, much younger (10, 8 & 6). However, I noticed that they always perceived my debit card as a magical instrument, with an infinitie supply of spending power. This concerned me, so I attempted to explain that the card was only usable if I had money in my bank account. They didn't really "get it", so I purchase the electronic version of Monopoly. Instead of paper money, each kid gets a debit card. There is a banking center that adds/deducts funds when you swipe your card. Several times, they spent all their funds on various properties and ran out of money. I think they kind of "get it" now.
07-30-2010 01:45 PM - edited 07-30-2010 01:47 PM
I don't have a kid, but I am one who also has spent most of my adult life wishing dearly that, instead of the "Free Enterprise" course which we were mandated by the Louisiana Legislature to take, someone had taught us how to balance a checkbook, make a budget, and use credit cards responsibly. It was not a lesson my family taught me, despite the many times I'd begged my parents to show me how to do the bills, etc. They were fortunate in that they had enough money (and enough weird ideas about money) to bail me out anytime I asked as a young adult, and not feel much pain, which really has taken an ENORMOUS amount of effort on my part to 1) recognize, 2) correct, and 3) refine. I love my folks, but they really had no clue about money themselves. I think they're a lot better now, though -- and I know I am. Not perfect, but a milion times better.
Be that as it may, I know my mistakes probably have cost me, literally, a million dollars over a lifetime in lost savings, wasted fees, and lost years of income. I'm here because I don't want to eat cat food at 65.
I want so very much for my younger brother's kids to learn how to handle money responsibly. He and his wife have some odd ideas about money, and he's also had a hard time getting his fingers out of the folks' wallet. They've had a house repo'd; wife doesn't have a job; he makes 4-5x what I do, but they may be paying off old bills, too. (There's a snake's nest of psychology in that budget...)
At any rate, if EVERY child knew how to handle his or her money wisely, I bet the economy would be a lot better off for all of us.
08-18-2010 07:42 AM
I'm doing a good job educating the current teenager. It's the earlier version that I messed up with. My credit was always bad, and I always paid cash, so he never really learned the concept of credit. He joined the military, and suddenly he was an adult living on his own and got a lot of credit card offers. Plus add to that the lump sum the military gives as a signing bonus, and he got off to a really bad start. He got depressed over his financial situation and it affected his performance, so the officers had to step in. He did financial counselling on the base, moved from the fancy apartment to on-base housing, got rid of one of the cars. Now he's doing a little better. He still does too much impulsive buying for my tastes, but he hasn't had to ask me for money and I haven't had any more of his bill collectors calling me so I guess he has learned something.
myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.>> About myFICO