Talking about Drugs is Easier than Talking about Credit

Market Issues by Jeff Mandel and Marlin BrandtPrint Article Print Article

RISMEDIA, November 23, 2009—In the United States, only 39% of all parents feel prepared to discuss drugs and alcohol with their teens. Sadly, less than that feel knowledgeable enough to discuss money or finances with them. Based on a recent study, nearly six in ten parents (60%) find talking to their kids about credit increases family anxiety while only 28% say it alleviates the stress. Most parents indicated that their lack of good knowledge about effectively managing their own credit was one of the main reasons for not discussing credit with their children.

Compounding the challenge, high schools and colleges don’t offer anything other than basic accounting courses that only begin to skim the surface in preparing our youth for the simple tasks of opening a bank account, balancing a checkbook or properly building and managing credit. So it comes as no surprise that 46% of recent college graduates have derogatory credit and even higher numbers for young adults of a similar age with only a high school education.

Parents must feel comfortable with their own knowledge before they begin helping their children. They can get educated on credit and finance through research or by working with credit coaches like those at ApprovalGUARD.com. In the meantime, here are some ways parents can begin putting their children on the right credit course.

Start Young – Young children are sponges for new information and can learn valuable money management lessons through their interaction and activities with parents. Use daily errand activities like going to the supermarket or bank to teach kids lessons about budgeting and money. Consider having them “pay” for rent, food, and other things with toy money for a week. Let them learn on their own at first and then go back and help them make a budget. Once your children are ready, consider a weekly allowance that is tied to household responsibilities and some form of budgeting and saving. Additionally, explain the difference between “wants” and “needs” to your children.

Teenagers – Teen spending makes up a great deal of the economy. If you are not careful, teen spending can inadvertently cost you a good portion of your salary. Work with your teenagers to teach them the important balance between spending and saving as well as budgeting. Help prepare them to appropriately begin building their own credit.

College Bound – Many young adults will begin receiving offers for credit cards (although this will soon change with the new Credit Card Act of 2009) and quickly find themselves with debt they cannot pay. College can be treacherous for students with credit cards. If you haven’t built the foundation of educating your children on effective credit management by the time they’ve entered college, it is not too late. It is critically important to start educating them on the best practices noted above and lead them by example through effectively managing your own credit. The key is to not procrastinate any longer. Various educational resources exist as referenced in this column to help minimize any anxiety you may have regarding your own subject matter expertise.

Jeff Mandel is president and Marlin Brandt is COO of ApprovalGUARD.

For more information, visit www.ApprovalGUARD.com.

For a complete summary of the Credit Card Act, see the “Latest News” at www.approvalguard.com.

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