We all know that it’s important to teach our children about money. However, teaching them about cash might not be the way to go. In fact, suggests Stephanie Eidelman at Forbes, perhaps you should start teaching your kids about credit when they are as young as six or seven.
The reason kids should start learning about credit early on? Credit is the reason that so many people are in trouble. Eidelman quotes the Consumer Financial Protection Bureau statistic that about 30 million people are in debt collection in some form.
So, while it’s great that children are learning about cash, it’s not really practical in today’s plastic-driven world. While it’s nice, in theory, to think that learning about how cash works will translate into better financial habits, the numbers say this isn’t the case.
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Instead of trying to avoid the issue of credit, it might be better to broach it with your children, and talk about how it actually works. Eidelman taught her son that she has “an arrangement with the credit card company that I will pay them at the end of each month.”
At the very least, children should begin learning that use of the credit card doesn’t constitute them using “their” money. And these concepts can be taught to younger children. Like Eidelman, I’ve had similar conversations with my son. He’s 10, and I’ve done my best to show him that credit cards are loans, and that they should be handled responsibly.
Your kids don’t see you paying with cash; they probably see you paying with plastic. And the sooner you can begin teaching them how that works, the better off they could be financially.
What do you think? When should kids start learning about responsible credit use?