Cut the Credit and Save YOU Some Money

Today's society glorifies a get-it-now mentality. Children learn this early. You probably noticed this when you were at the grocery store with your toddler. She wanted a candy bar or a special toy and surprised you when she told you to write a check or use your credit card to pay for the new toy or treat. It may have been cute when she was two, but now, 15 years later, she has the same mentality and either you are the bank or she has her own in the form of a credit card. And no longer is she asking for a 50 cent treat or a $5 toy, but $50 t-shirts and $100 pants.

You learned the hard way money doesn't grow on trees, and you want to teach her so, if she doesn't have one already, you are tempted to get her a credit card so she can learn to be responsible with her money. You learned how to budget back in high school-but you don't always use your budget. Your daughter, you figure, should be able to handle a credit card with her after-school job. Besides, she's responsible.

Things have changed drastically since we were children. The old plastic cash registers we used to play with-the ones with the paper money and oversized plastic coins-have been replaced with credit card-swiping registers teaching our preschoolers that money is plastic. Many of the cards coming with these registers have Citibank, Bank of America, or Chase's logo blazoned upon them, creating brand loyalty early.

When your student begins applying for colleges, his or her information is put on a list and sent to a credit agency. Colleges can earn up to $100,000 a year just by doing this. This begins the onslaught of credit card offers that continues throughout life. Citibank alone spends over $100 million a year marketing credit cards to high school and college students.

Having a credit card has become a rite of passage into adulthood-not to mention your daughter can now get her $100 pants whenever she would like a new pair, with just a swipe of a card and a signature.

So what is the problem?

There are many. The fact that these student cards start at an interest rate of 22% doesn't seem to bother too many people. When you tell your student a card is "for emergencies only" and "pay off the balance every month", ask yourself if you do. Only 22% of consumers do pay off their credit card balances every month, and the other 78% add daily to the $1.5 TRILLION in outstanding CONSUMER debt last year.

Another, very serious, problem is that one out of every five bankruptcies filed last year were from college-age kids because of credit card debt! This is hardly the way you want your child to start his or her adult life.

And don't look to schools to teach your child about personal finance. While your student will graduate with extensive knowledge of global warming, and the list of wrongs regarding the Iraq War, hardly any of them will be able to balance a check book or prepare a budget.

Home Economics classes (which used to teach these things) have been replaced with Self-Esteem and Sex-Ed. NO, Home Ec must be taught at HOME.

One of the best ways to do this is to set your child up with his or her own checking account when he or she hits middle school.

Any money you would budget for your child's clothing, entertainment, extra food, or other incidentals should be deposited into your child's own account, as should any allowance your child receives. When your child begins his or her after school job, this money should also be deposited into this checking account. Let your student come up with his or her own budget and then stand back.

He or she will stumble and fall a few times (and have to pay over-limit fees from the bank), but do not bail him or her out. As adults, we do not have someone to pay our bills (or bank fees) when we stumble, and we should not teach our children we will bail them out when they get into trouble.

Budgets are a fact of life. To make sure your child does not become a statistic, put your child on a budget. This will save you money-you won't be the one paying for those $50 t-shirts-and teach your child the right way to handle hers.

Besides, if your student learns to live without credit of any kind, and the value of delayed gratification and saving for the things she wants rather than put it on credit, she will be able to save massive amounts of money and become a millionaire by the time she's 40! (Just think of how much money you could save and invest if you didn't have any debt payments!) And if she's a millionaire by 40, that means she will be able to take wonderful care of you!!!