Just One Gift, Please

By Jim Fay

We hope you all had a wonderful Thanksgiving! With Christmas just a few weeks away, you may be having conversations like this with your kids:

“What do you guys want for Christmas this year?” Twelve-year-old Josh was quick to answer with a long list of the latest video games and electronic gadgets. Fourteen-year-old Jennifer answered. “Oh, I’m not as greedy as he is. I’m only asking for one thing this year.”

Astonished, their parents looked at each other, each thinking how much their daughter had matured this year. “What is that, sweetie?”

“A credit card. All my friends have them now.”

Ouch! Is a child this age ready for that responsibility? The answer is that nobody is ready for a credit card until they have practiced, and mastered, the use of many financial tools including:
  • experience with managing an allowance
  • many experiences paying back small loans to their parents
  • experience with late payments and the consequences
  • experience with repossessions by the Bank of Mom and Dad
  • a solid understanding of interest rates
  • practice with a prepaid credit card
  • an understanding that it takes over 35 years to pay off a $4,000.00 credit card bill if only minimum payments are made each month

Handing a credit card to a young person without this training is like giving somebody a car without driving lessons.

Is this an article just about teenagers? You’re right; it isn’t. Start training your kids early. Check out the chapter on allowances in our book Millionaire Babies or Bankrupt Brats?