Money Monday: Do You Talk to Your Kids About Money?
When his daughter headed off to college, Dan Kadlec, wrote her a letter that provided her with financial tips like:
- Keep Track of Your Spending - Keep the receipts from everything that you purchase so that you can go back and count what you spent. Make adjustments as needed.
- Get the Right Credit Card - You only need one. Never charge more than 30% of your credit limit and pay off your balance every month. Don’t carry a balance.
- Good Credit History - Dan stresses the importance of having a good credit history
- Study Money - Take an economics course or a personal finance class.
- See the Big Picture – Don’t pick a major based on how much money you can make. Explore, switch majors and study abroad.
Click here to read the entire letter
Dan has done a great thing for his daughter. I am quite sure this letter was not the first time that Dan had financial conversations with her. This is something that we all need to do for our kids starting at a young age. My parents were great, but I don’t remember discussing credit cards and credit history with them before I left for college.
When I got to college, I did what a lot kids are doing. I got a credit card. And the balance was very low.. like $500. But I did not have a job. And I did not know what I was doing either. I did not even understand that if you missed a payment..that your credit would be impacted and that the card would not work. I can remember vividly going out one Friday night with my college girlfriends. I went to pay for my meal and my card was declined. I knew I had money on the card. But I missed my previous payment and I just thought…I will pay double on the next payment. NOPE…didn’t work that way for me. I was embarassed. Another example, I let a friend cash a check through my bank account. They wrote me a check from an out of state bank account. The check cleared and I gave them the money. Several days later, the check actually bounced..sending my account into the negative and my credit along with it. I did not have the money to cover that check either.
When I left college, my credit rating was not good. And it was not even a lot of debt…less than $2000. But I messed up the little bit of credit that I did have. My first job out of Grad school paid well…but I could not get anything on credit because of the mistakes that I made in undergrad. My credit did not get better until I was like 25 or 26 years old. And then after I purchased my first home, my credit improved significantly. So I had to learn my lesson the hard way.
I would add a few things to this list:
- Don’t co-sign for anyone. (For the most part, a person is asking you to co-sign because they have messed up credit. Or, they have not established credit yet.)
- Don’t cash checks for people either. If if you have to deposit a person’s check into your account, wait for a week or so..to know if it has truly cleared.
BMWK Family – Do you agree with Dan’s list? Would you add anything to the list? Did your parents teach you about credit or did you learn the hard way?
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