More than 70 percent of parents say their kids don’t know the basics of money management, according to Visa’s 2012 Financial Literacy Barometer. What do you think that says about the future? The adults making that assessment haven't demonstrated much financial savvy, either, (e.g. dot-com bubble, housing bubble, Great Recession). The good news is we can help our kids avoid future economic hardship.
Ideally, everyone should have the foundation for a solid credit score as well as experience using a variety of financial products once they become financially independent. In order to achieve that goal, we recommend giving your children an allowance on a prepaid card when they start high school, while requiring that they pay for some of their own expenses. There’s no risk of racking up debt or ruining your credit with a prepaid card. Once your child shows an aptitude for budgeting, sound spending, and avoiding unnecessary fees, progress through cash and checking account-based allowances before finally graduating to a student credit card.
So, there you have it, your road map to a healthier wallet in 2013. All that’s left to do is stick to your resolutions and have a great year.
– Odysseas Papadimitriou is CEO of the credit card comparison website Card Hub and the personal finance social network Wallet Hub.