Where do kids learn about banks and credit? I have gone into many schools and spoken with many teens about money. There are always a handful who say things that startle me. I have heard things like…
- Do I really need to pay credit cards back?
- If paying bills bothers people, why don’t they just throw the bills away?
- I know I have money left in my checking account because I still have checks.
- Why do people need to work when they can get money anytime they want with an ATM card?
Sound unbelievable? Not only are these ideas commonly believed by kids, but there’s a logical thought process behind each one. If you don’t explain what you’re doing, your kids will make assumptions about money based on what they hear you say and what they see you do.
Take the idea that money from the ATM is free for you anytime you need it. The boy who believed that probably heard his parents complain about not having any money, then watched as they took money from the ATM. What other conclusion could he have drawn?
The idea that you don’t have to pay your bills back comes from a general assumption about the world based on ideas of fair play. You don’t have to run laps in gym if you have a sprained ankle. You can take a make-up test if you have a sick day. Why can’t you just put off the bills if you don’t have money because you got sick? If you can’t pay, they shouldn’t expect you to. That’s fair, right?
But kids grow out of these crazy ideas, don’t they. It’s not like they hold them onto them into adulthood. Trust me, they may not believe the exact same things, but their misconceptions and ignorance can still hurt them.
Here are some scary facts about college kids and credit cards from credit.com:
- 91% of undergrads have at least 1 credit card
- Undergrads have an average of 4-6 credit cards (that means more than half have more)
- $3,173 is the average amount of undergrad credit card debt (that’s not including student loans)
- 25% of undergrads have paid late fees
- 15% of undergrads have paid over limit fees
Does this scare you? It scares me! Don’t let your kids make assumptions. Teach your child about money and credit by speaking with them. You don’t have to be perfect (no one is), but showing your child the process behind your decisions can be eye-opening.