The role of a parent is to teach their kids valuable skills such as manners, social etiquette and smaller tasks like tying their shoelaces or brushing their teeth. A parent’s job is never ending but oh so rewarding. But, one of the areas that many parents neglect to focus on is teaching their kid the importance of a credit score. Your kid may think a credit score is just another number that doesn’t matter or they have no idea what a credit score is. This all depends upon how involved with the finances your kids have been. Today I want to give you some tips on how to teach kids the importance of a credit score.
Teach What Credit Means
The starting point to ensure your kids know the importance of a credit score would be to help them understand what credit means. Start by explaining earning, borrowing, paying money as a simple concept. This will help them understand the term credit. Practice the concept of credit by lending your kid a small sum of money each week; in turn, you can add a penny or so for interest. This basic tool that’s used in small increments will help teach your child the term credit at a basic level.
Explain Lifestyle Options
As your kids enter into an elementary school they are more aware of how other people may have more or less than your family does. This is a great visual concept to teach lifestyle based on good or bad credit scores. When one has a higher credit score they will have more opportunities to have a fancy car or nice home. Be wary of teaching kids this lifestyle option concept based on credit score in a way that teaches them to judge others.
Discuss Bank and Credit Cards
Talk about bank accounts, if your kids are old enough they may have their own bank account. This helps them to build credit with a bank. The bank will see that they have funds available, and are good at either saving or spending money. If you teach your kids to be better at saving money in their bank account, you will be doing your part to encourage that they have a good credit score as an adult. Some banks report accounts to credit bureaus too, which is important to explain to your kids.
Be Open and Honest
Some parents aren’t comfortable sharing their credit score with their kids, and that’s understandable. If you are open and comfortable with being honest about your own credit score, and how you are working to either build it up or keep it strong, then this is the perfect way to be a positive example to your kids in teaching them the importance of a credit score. If you’re good at keeping your credit score healthy and remain open and honest about the struggles and goals with that, your kids will ultimately learn how to be that way too.
About the Author – Brandy Ellen Tanner is a Positive Lifestyle blogger who works from home while raising her 3 children. Learn more about Brandy at BrandyEllen.com and read her other parenting articles at ParentInfluence.com.
Tags: credit score, financial literacy, financial literacy for kids, finlit