TrueCredit.com Encourages Parents to Have the “Money Talk” With Kids
CHICAGO, May 21, 2009 – With teens spending $125 billion each year, according to a study from research firm Piper Jaffray, parents are under increasing pressure to ensure their kids understand financial basics and can make wise spending decisions. But a recent survey from TrueCredit.com indicates that parents could use help teaching their kids smart financial habits.
The survey, which looked at how much financial wisdom parents pass down to their children, revealed that nearly one in five respondents have never spoken with their kids ages 4-18 about money basics. In order to avoid raising a new generation of over-spenders with hefty debt loads, experts at TrueCredit.com recommend that parents have the “money talk” with kids before giving them financial freedom.
“Of parents surveyed, 71 percent said they require their children to use allowance money for their own purchases,” says Lucy Duni, vice president of consumer education at TrueCredit.com by TransUnion. “Before turning them loose with their hard-earned allowances, parents should take the critical first step of teaching kids how to budget and prioritize their spending and saving. Educating our children about financial basics early on can help them make informed decisions down the road.”
The survey also revealed that only 15 percent of respondents have added their child as an authorized credit card user to teach responsible credit habits – but with student-loan provider Nellie Mae reporting the average credit card debt for college students at $2,748, parents may want to consider such a step.
To encourage parents to educate their kids about managing money, TrueCredit.com is helping tackle this tough subject with the following tips:
- Start Small – Young children can learn through interactive activities with parents. Use daily errand activities like going to the grocery store or bank to teach children impromptu lessons about budgeting and money.
- Weekly Allowances – Encourage children to save a portion of their allowance each week by calculating how much they could save in a month or a year. Opening a savings account for older children can educate them about making deposits and withdrawals, along with the benefits of saving money as they watch their bank account grow.
- Wants vs. Needs – Encouraging kids to earn and save for something they really want is a smart way to teach healthy spending habits and delayed gratification. Help your child keep track of their savings with a chart or offer them incentives – for example, for every $20 they save, you could add $2 more.
- Teaching Teens – Set guidelines for their use of a prepaid credit card or a parent’s card and explain how credit works. Sit down with your teen each month and go over the credit card bill and receipts to show them how fast their charges can add up.
- College Days – Teach your kids about responsible credit card use, the dangers of debt and the importance of paying bills on time before they go to college. Encourage them to order their credit reports, as many don't realize the impact of their spending and payment habits until they see the effect on their credit score firsthand.
To see the full survey results and for more information, log on to www.gotruecredit.com and visit the Learning Center.