Instilling the Importance of Financial Responibility

Q: My son is seventeen and will be going off to college next year. He has some money in a bank account that he’s saved up from a part-time job and a credit card that is almost completely up to him to pay off (excepting emergencies). He doesn’t use it much right now, but I imagine when he’s on his own he’ll be a little more loose with his spending. Any suggestions on teaching him to handle his finances so I won’t have to worry when he’s away?

Shirley Mueller, MD:  It sounds as though your son is industrious since he has had a part-time job. That, in itself, is a good sign. Also, having first-class credit is important these days so if your son uses and pays his credit card debt on time, it would work to his advantage in the future. Still, a credit card is a credit card, and novice users especially can get carried away.

In order to help your child use his card most expediently, these are some considerations that you might act on in an effort to help. Caution him about the cost of late fees including a couple of examples (16% interest or more — yikes!); he will readily see that paying late is like throwing money into quicksand without retrieving anything in return. In addition, remind him of how a less than stellar credit score now would adversely affect his ability to obtain a loan in the future. Lastly, if you think he wouldn’t take offense, you could offer to help by looking over his credit card bill every month  (though you may want to evaluate what your son’s reaction will be prior to asking, as some teens would take this proposal as lack of trust while others would be OK with it).

In the worst possible case that the credit card balance gets out of hand, it might be that a debit card would have to replace the credit card. In this way, spending is automatically controlled. Another possibility might be a reloadable pre-paid card.

Under any circumstances, your son is likely to be more responsible when he leaves college than when he enters. So, if he ends up not being “carded,” there always is another day since he is young. Not a bad problem to have.

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