Start Early

Studies have shown that children develop money behaviors as early as three years old, and these behaviors are nearly solidified by the time they’re seven. Even at a very young age, your children are watching the way that you use money and are subconsciously molding their own views after what they see you do. To create good money habits early on, give your children incentives to earn money rather than simply giving it to them. For example, give them a weekly or monthly allowance if they complete chores around the house. Cementing these habits early on instills good financial habits for the future.

Teach the Difference Between Debit & Credit Cards

Kids can easily associate that one swipe of a plastic card allows their parents to buy things, but it’s crucial to teach them that not all cards are the same. Debit cards are essentially like using cash, but credit cards use borrowed money and must eventually be paid off with real money. This is a good thing to tell your kids so that they do not overspend in the future or rack up a ton of credit card debt. Likely, your child will have a debit card before a credit card, which they can use to build good habits before getting a credit card.

Add Your Kids as an Authorized User of Your Credit Card

You can help your child build credit before they turn 18 by making them an authorized user of your credit card. Many cards require a new user to be at least 13-15 years of age, but some have no minimum requirement. With authorization, your child can use the card independently, and you can use this as an opportunity to teach them when to use a credit card and the importance of paying their credit card bill off monthly.

Word of caution: Adding your child as an authorized user to your credit card can also impact his/her and your credit score negatively if the card is not used responsibly. Keeping a close eye on card usage and paying the full card balance monthly is key.

Co-sign on a Credit Card or a Loan

If you have an older teenager who's buying their first car and who you trust to make regular payments, consider co-signing on a card or a loan with them. This can help them get their foot in the door of the credit world as they turn 18. If you choose this option, it is important to remember that your credit is also on the line, so keep an eye on those payments.

For more ways to help build your kids credit or create good money habits, talk to a Spero member advisor today or visit us at one of our convenient branch locations!