There is a point in every parent's life when they have to let go and allow their child to grow up and start to take on a life of their own. This often comes as a child graduates high school and takes off for college. But as a parent, you may not think they are ready for all of the things they need to know to get by in the world.
One of the important things you need your child to know before you 'let them go' is how to take care of themselves financially. This doesn't just mean making sure they know how to pay their rent and utilities bills, but also that they know how to take care of their credit so they can have a good line of credit throughout their lives.
Often college is when children get their first credit cards. But you may not be sure your child is ready. Here are three steps to getting them on the road to financial independence.
Have a Talk
You need to be confident that your child understands the importance of getting a credit card before you ever allow them one. The best way to assess this is to take a seat and talk credit cards with your child before approving them getting one. Make sure they understand the responsibility that comes with credit cards and that a failure to be responsible could follow them for years to come on their credit report.
Credit Card Light
Before you give them a normal credit card with a high limit, you may want to start a little smaller on the credit front:
Prepaid Credit Cards - You could begin with prepaid credit cards, which are cards that you charge with money, much like an ATM card. These will allow you to see if your child tries to keep going over their spending limits.
Student Credit Cards - Many of the student credit cards out there don't allow too high of limits. The best student credit cards are like starter credit cards that allow you to set the limits your child can charge to, so their credit can't get out of hand, even if they forget to be responsible.
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