@1214mom, yes, I was thinking about suggesting to him that getting an apt off campus in his junior and/or senior year would be a good credit builder as well.
@baktrax - totally agree about value of work/job. It is more than just to teach financial responsibility, it is helpful for getting internships and eventual full time job after graduation. As a hiring manager, I am always a bit weary if there is no work history, even if it is at fast food or retail places.
If your kid is going away to college, I think to have their own credit card with low limit is not very useful. What if there is an emergency while traveling - car trouble, stuck at an airport needing a very expensive hotel room? I gave both kids my credit card for emergency.
To teach my kids financial responsibility, I started by giving them a set monthly allowance since they were in high school. They didn’t have to work for the allowance, it was a set amount that got deposited into their acct every month. They used it to buy gifts for their friends/family, going out, few extravagant things I wouldn’t normally get for them, and saving. They learned to budget just like us. They knew there would be no extra money for them if it should run out. Some parents thought it was a large amount of money I gave them, but I asked them to add up all the money they gave every time their kid wanted to do something on the fly, it turned out to be just as much if not more.
OP - work out a budget with your kid (I think you said $200/mon), and help him stick to it by not subsidize him every time he runs low. College is a great time to learn to be financially responsible because you know he won’t be out on the street if he should run out of money. Again, I strongly discourage in getting him his own credit card if he doesn’t have a real job. It is too tempting to use it for new toys his friends have in college.
“Again, I strongly discourage in getting him his own credit card if he doesn’t have a real job. It is too tempting to use it for new toys his friends have in college.”
A kid can have their own credit card with a low limit as well as a parent card in case of emergency. The value IMHO in having their own card that they have to pay (from summer earnings, current employment or an allowance) is learning to resist the temptation to buy things they can’t afford. I would rather my kid learn that lesson in college than when they have their first job. I’m not saying that all kids are going to go crazy charging things out of college (although there are plenty of temptations - new apartment, new work wardrobe, etc). I’m confident my S would have managed his money well after graduation even if he didn’t have his own card during college. But some kids, like my D, may benefit from the freedom and lessons having their own card provides.
The authorized user scenario still has a built-in parental check. They know on some level you will pay if they can’t because you won’t let your credit be tarnished. Paying their own card puts the responsibility and consequences on their shoulders.
My younger brother graduated with thousands of $$ in debt because he wanted to keep up with Jones. D1’s used to tell me stories of some people buying Mac and iPhone on their credit cards and only make minimum payments. They would not use their home address as the billing address so their parents wouldn’t find out. They would tell their parents that the laptop was free or paid for by their FA money.
An easy way of keeping track of your kid’s credit is to sign up online to get their credit scores, on it you’ll see number of cards under their name and outstanding balance for each card. I did that for D1 and now she owns the account. I no longer have access to it. I tell her to check on it often to make sure her credit is excellent. In this country, your credit score is worth a lot of money, so I also warn her about co-mingling her credit with her future SO if his credit is not as good.
Teaching our kids to be financially responsible is a lot of day to day coaching/mentoring. They mimic what we do.
Sometimes I wonder how much personality plays into spending habits despite good efforts on the part of parents. My adult siblings and I have very different attitudes towards spending and fiscal responsibility, or irresponsibility in some cases.
You know…for many things, you can live in a cash economy.
@doschicos - Based on my experiences with my kids and my siblings, I think personality has a lot to do with how people manage money.
@thumper1 - For people who have a hard time sticking to a budget, my H suggests the envelope system. Each payday allocate cash among the budgeted categories and place the money in separate envelopes. When it’s gone, you’re done spending. For some, there is a disconnect between plastic money and real money.
My son used the envelope thing when he first got his own apartment. He found it very helpful…but because he isn’t a big spender, he just had too much cash around. We suggested he use a bank…which he is doing.
@doschicos, agreed. Four of us were raised by the same parents. I’m an oldest child and the most financially responsible of my siblings. Youngest sister has always been the most financially needed(always spending way beyond her means). So I think that birth order plays a factor as well. Son is not an only child but our family makeup puts him in an only child position. We have tried to instill fiscal responsibility in Son, but we have faltered along the way. He has always been such a good kid, accomplished at most things he takes on. We developed a tendency to reward him with what he wants. I have noticed that Son hates spending his own money, but he’s doesn’t mind spending ours (that’s because we’re working - he says- we can always get more). It’s going to be interesting to see how he pans out on his own.
I prepped my child and since sophomore year he’s been an authorized user on our USAA credit card. He keeps track of what he spends to make sure it doesn’t go over $50/mo and any purchase over $20 he asks permission. He’s never abused it and about to graduate.
And unfortunately he’s been getting American Express Gold card offers since then but we ignore those.
I think it is good to teach our kids to be generous and enjoy spending money sometimes too. D1 is also very tight with her money, and I had to tell her to pay for her younger cousins’ meals and take her parents out. She is much better now.