If you are the person who makes your household’s buying decisions and responsible for paying the bills, and it sometimes all just feels like a lot, you are not alone.
This is why it is important to teach children financial literacy as soon as they can understand basic finance concepts. Responsible money management is partly about budgeting and saving, and partly about understanding and managing credit.
For example, when unexpected expenses like a burst geyser crops up, understanding how to navigate products like a short-term loan is crucial. This can and should be a learning experience for children.
Here are five essential credit tips to impart to children in the family:• Do not be afraid of credit: You will need a good credit score when you want to borrow money for a car, or a house. Start with a low-risk product and a low limit. And remember, your credit limit is not a target you have to aim for.
• Manage your credit responsibly: Do not borrow more than you can afford to pay back. Always make your monthly payments on time and in full.
• Look for transparency: Before you sign up for any credit, you should be given enough information to understand fees, interest, and repayment terms.
• Test the service before you commit: If a credit provider is not readily available via WhatsApp, email, their call centre, or an app, and cannot provide clear, helpful answers to your questions, reconsider giving them your business.
• Look for convenience: The easier a lender makes it for you to track and monitor your account, or update your payment information, the better your chances of maintaining a good financial standing.
Family conversations about money and credit should always be free of emotion or blame as you learn things together. The idea is not to put the weight of your burdens onto your children’s shoulders; rather, the aim is to talk about how financial needs arise, and to figure out how to choose the best solutions.
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