Should you give your child a credit card?
Providing your child with a credit card can be convenient, but is it a good idea? In addition to setting out rules around purchase types and amounts, here are a few points to consider before you give your child a credit card.
Good financial habits from the beginning
Responsible money management is learned behaviour that develops into a habit over time. The sooner that your child learns good money management skills, the more likely that attitude towards money will take root as they grow into adults.
Given that financial success has much to do with your attitude towards spending and saving, the sooner that you can embrace these lessons, the better.
Baby credit steps
While your children might not be able to apply for their own credit card until they are 18 (or 19 in some provinces), one of the benefits of giving your child a credit card when they are younger is that they can learn hands-on about money management without assuming all of the risk.
Over time, and in real-life situations that are relevant to them, they can see what happens with credit when it is used wisely (and perhaps unwisely), but with your support. It’s these kinds of lessons that tend to stick.
Visual tracking tool
One of the most important parts of responsible budgeting is to track your spending. A credit card is a good way to teach this skill, because purchases are listed. You can discuss using the card before a purchase is made and then demonstrate how it fits into your budget by paying the balance off. Even better if your child has a part-time job, or has money saved that they can contribute to making payments, so that they can connect value with money.
This can help curb the urge to impulse spend or to use credit as a means of extending the budget when they are older.