Teaching children responsibility is a difficult task, especially when they’ve reached their teenage years. Parents must face the challenge of overcoming random outbursts, impulsive tattoos, entire nights out, and terrible clothing choices when trying to turn their problematic teens into responsible young adults. Often, there is an invisible time bomb between your 13-year old child’s identity crisis and his 18-year old future that must learn to make choices on his own.
Amidst the chase for responsibility, your teens aren’t short of struggles either. After the initial scent of freedom, the accountability that follows is scary. Your teens may be trapped in a loop of indiscretion controlled solely by hormones and puberty.
You and your teens would have to do something you hadn’t done since your last family laser tag war five years ago. You will have to band together to ally in making rational choices -- and that begins with financial responsibility.
The importance of teaching teens about money
Money is a concept that is introduced gradually to children. You likely gave your kids as little as P50 per week and gradually increased it as they got older.
The system for allowance increases differs for each parent. Regardless, what matters is that your children have learned what it’s like to have their own money and see their weekly earnings gradually increase. However, age comes with more wants and needs, and eventually, P500 won’t even be enough to cover a week’s worth of food and transportation.
As a parent, you also don’t want your kids to miss out on the joys of youth, no matter how much you can’t stand your teens’ equally-crazy friends. As a result, you want to give them a little bit more than necessary so that they can afford regularly hanging out on the weekends (and also because your ears hurt from their constant begging for a higher allowance).
But the thing is, your teens aren’t supposed to use up the money that you allot to them. In the real world, a salary has to be divided into multiple parts: regular bills, recreational allowance, savings, and investments. If your teens spend their entire allowance on recreational spending, then they’re in for a tough time once they start earning for themselves.
If you give your teens a weekly or monthly lump sum, then it’s even more problematic if they spend it all within the first few days. Remember, having older kids mean that you can’t monitor them every day. You probably won’t even speak with them regularly. Consequently, you can’t learn to trust your teens if they can’t prove themselves by managing their spending habits.
That’s why it’s essential to teach your teens how to be financially responsible. Managing assets is one of the toughest things to do, even for adults. Without the proper guidance and hands-on experience on the ups and downs of money ownership, your teens will eventually be thrown into the real world broke and clueless. As a parent, it’s your job to introduce a platform where they can prove their ability to manage money.
A whole new world of supplementary credits
One of the best ways to teach your teens how to manage their money is to introduce them to the world of credit cards. You may wonder how any parent could be crazy enough to give their uncontrollable teens a credit card, of all things. But the fact that they’re uncontrollable by conventional means is why you should opt for this idea.
Teens are typically not new to bank cards. Most parents open their kids’ bank accounts from an early age to introduce them to the idea of saving. For older kids, parents opt for a debit account, where they can easily wire their kids a weekly allowance. But credit cards are entirely different from their debit counterparts and can teach teens a whole new level of fiscal responsibility.
Most banks require you to be 21 and older to apply for a credit card, but you can sign your children up for a supplementary card from as young as 13. For instance, if you own a Union Bank credit card, you can have your teens who are 14-years old and above apply for a supplementary card under yours. The benefits are almost the same. They can partake in reward programs, discounts, insurance, and can decide on how they want to handle their monthly payments. You can view the full list of benefits here.
Jumping into this decision may be daunting for both you and your teens. However, as the primary credit cardholder, you have the power to set lower credit limits and loosen it up based on your child’s performance.
What you can do
This is how supplementary cards for your teens are likely going to work but feel free to go about it in whatever way makes you and your children comfortable.
- Give your teens a credit limit slightly higher than their monthly allowance. They can use their card however they want, but it’s up to them to pay it in full every month. If they end up spending the cash-on-hand and max out their credit card, then it’s up to them to figure out a way to pay it off.
- Give your teens a credit card to use throughout the month. Give them their monthly allowance once the credit bills come in so they can pay it off and be aware of how much they’ve overspent. This method will help them keep track of every expense.
Remember that the supplementary card is used to teach your teens how to be fiscally responsible. Don’t help them out with every payment because it’s something that they need to learn how to do on their own.
Note that this method of discipline requires a sense of accountability on your children’s part. Before signing up for a card, sit them down and give them a thorough talk about how this works. Make it clear that the responsibility is theirs to shoulder alone, and ensure that they’re up for the challenge.
Solving money problems the adult way
The best way to describe the difference between debit and credit cards is by comparing them with pre and post-paid phones. Debit cards work like pre-paid phones, wherein the range of services that you can use is limited to how much you paid for beforehand. In contrast, credit cards work like post-paid phones, where you pay for the number of services you consumed for the duration of a billing period.
But here’s the catch -- you can delay your credit payments for the cost of additional interest. This nuance is likely the first lesson that your teens will learn upon obtaining a supplementary credit card. Using a credit card is akin to taking a loan, so they’ll quickly learn that it’s incredibly easy to go into a debt cycle. Simply by neglecting their monthly credit card payments, they can incur large debts just through interest alone. With only debit cards and personally handed-over money, they’ll never learn what it’s like not to have money and be in debt.
By giving your teens free dominion over their spending habits and supplementary credit card, they can learn about the nuances of interest and debt. They’ll learn to think twice before purchasing things that they can’t afford. And, they’ll learn how to work around payment plans so that they’re always on-track with their credit.
The value of good credit score
If your teens understand how credit cards work, they’re unlikely to run into problems in the future. Building a good track record as early as possible is an invaluable asset, as it will help your children take personal and student loans in the future. When they establish a good credit score and keep it up from a young age, their credit history will look good to banks and lenders.
Trust and financial responsibility
When your teens learn how to handle their finances, you’re more likely to trust them with making big decisions. With supplementary credit cards, your teens can take the first steps toward maturity. Their horrendous tattoos and nose piercings will probably stay forever, but so will their ability to handle money.
Mistakes are a part of growing up, but throwing your children into the wild with no ammunition is a ground for failure. As a parent, you have to show them the real world while holding their hands just a little bit, so once they’re out on their own, they’ll know exactly what to do.