When children go away to college these days, they often carry two “essentials” that weren’t there for prior generations: laptops and credit cards. According to Nellie Mae, the national student loan financing corporation, 83 percent of undergraduates have at least one credit card, and the average balance owed is $2,327.
What’s wrong with this picture? It suggests that young people are ringing up too much debt too fast. It also suggests that they don’t understand some basic concepts about money – not the least of which is that anything bought over time, at interest, ends up costing far more than it should. Impulse buying and overspending — before they are even out in the working world — leave many of today’s graduates with debt they can’t afford and a poor credit rating that could affect their chances for getting hired.
So what’s the solution?
For young adults, and their parents, the solution is in not spending beyond your means and instead learning how to manage credit.
Let’s start with a few basic facts of modern life:
For parents, the challenge is helping their children understand the value of money and credit, regardless of its form. Here are some suggestions to start them early:
In the modern world, it’s realistic to think that when you child goes off to college, he or she may have at least one, limited credit card. The goal of educating children about credit is to send them off with the tools necessary to use that credit wisely and not owe an arm and a leg on top of the student debt that most graduates will live with for a long while after graduation day. Their employment opportunities could depend on it.
Article by Tim Ehlers.
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