So it's no wonder Credit Karma (www.creditkarma.com) has come into being. The brainchild of CEO Ken Lin, it is a site that provides consumers free access to their credit scores, offers free advice to parents on how to establish good credit habits with their children and helps them prepare their kids for a healthy financial life. Ken shared his finance tips for kids with me. I hope you'll enjoy them. And pass on the karma. We could all use a little of that right now. Start small by teaching young children about money management through their interactions with you. · Teach them by using daily errand activities as small impromptu lessons about money and budgeting. Give a weekly allowance as a way to teach your children about spending responsibly and budgeting. · Pick a reasonable amount of money and give it to them in small denominations like $1 and $5 bills rather than a $20 dollar bill. Encourage your children to save a portion of their allowance every week by calculating the amount that could be saved in a month or in a year. Older children can benefit from opening a savings account which will educate them about deposits and withdrawals. Explain the difference to your children between wants and needs. · Encouraging your children to save and earn for something that they really want is a good way to teach healthy spending based on delayed gratification. Help your child keep accurate track of their money by giving them a chart and piggy bank incentives like $5 for every $20 that they save. When your child grows into a teen, you may consider giving them a prepaid credit card or access to a parent’s credit card**. · This is a convenient way for you to introduce them to credit, but it might end up leading to startling monthly bills if your teenager is not careful. You should sit down with your teenager every month and show them how their spending is affecting your credit score so that they will understand how theirs would be affected. (**Editor's Note: with a very low limit. If you can't pay off the total amount in one month, rip it up before it gets maxed out). Help your child choose the right credit card. · Users tend to be very loyal to their first credit card, so helping your child compare annual fees and interest rates is important to establish the right long-term credit relationship. Students who have credit cards in college can find it difficult to handle their money because of the pressure that they have to spend on a limited income. · Teach your children early about responsible credit card use, debt and late payments and fines. Check their balances with them to help make sure that they stay on budget and take the time to go over their credit score and reports often to help them stay on track at all times even while away at college. Luckily, I only ever maxed out my credit card once as a teen. And I learned my lesson never to do it again. Karma. It's a good thing. The first time I got a credit card, I was eighteen years old. Although my mom co-signed the card, I knew better than to rack up the bills. She taught me well. You could say she passed along her good credit karma to me.
