Rubina Ahmed-Haq: Parenting by the Numbers


Why I Will Be Giving My Teenager a Credit Card

I'm not crazy, just a realist

teaching kids to use credit cards

When it comes to teaching your teenager how to manage money, the thought of handing them a credit card seems downright irresponsible. But that’s exactly what I plan to do.

We live in a cashless society, and financial literacy lessons need to be updated to reflect that. 

When’s the last time you paid with cash? Maybe at a bar or at the farmers market. That’s why it's so important to teach your teenager about managing money in the real world.

Here’s how to start.

Start with a pre-paid credit card 

If you plan on giving your teenager money for a shopping trip consider a pre-paid credit card. This works best when they have to buy multiple items and would need to keep their budget in mind and a tally of what they have spent. This will help demystify the act of using a credit card. They may be asked to sign for their purchase, or use their pin code. Either way it will help familiarize them with what it means to pay with credit.

Use it for allowance 

Once they've done a big shop and you see they stayed on budget, continue using their pre-paid card for any allowance or birthday money. Just like cash, they can hang on to it until the want to buy something special. This will teach them the art of delayed gratification. Having a credit card in your wallet means you can buy something whenever you want, but fighting that urge is something you can only learn once the card is in your possession. You’re not fighting temptation if there's no temptation there. Let them carry the card and start learning now. 

Get a joint credit card 

Before your teenager heads off to university it's important for them to have a handle of the responsibility that comes with having a non pre-paid credit card.  University campuses are flooded with credit card companies wanting students to sign up. It can be a great move for someone who wants to start building their credit early, but they can be dangerous for someone who’s never been taught how to use a credit card before. By giving them a joint credit card, with their name on it, you can help prepare them for when they have a card of their own. Set a smaller limit that card and make sure your teenager knows what they are allowed to spend each week. 

My daughter is 4 years-old right and I am using cash now to teach her the fundamentals of how money works. I let her pay with cash, make sure she gets her change back and watch as she makes sure she puts the leftover money back in her wallet. It’s adorable. But when she's a teenager, these adorable lessons are no longer going to work. Along with teaching her how to save money, how to plan for a big expense and what it means to pay taxes, I also want her to be credit card savvy.

My lack of control lead me to $5000 of credit card debt when I was 23 years old. It took a loan from may dad and another year of paying him to get that debt paid off.

I don’t want that to happen to my daughter.

Disclosure: I am a third party spokesperson for President’s Choice Financial and PC MasterCard. 

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