Taking charge of charging

Mike Sullivan, director of education for Take Charge America, a national nonprofit consumer credit counseling company, says that parents should start early and talk with their children about the potential consequences of credit card debt. He provides the following financial tips:

Open a checking and savings account. Review the terms and fine print of each with your teenager. Explain that fees can be incurred if the account is overdrawn.

Send bills and statements to your home address. Monitor spending activities and cash withdrawals when statements arrive and teach teenagers how to balance their checkbooks. Balances shown on online bank accounts may not reflect that morning's ATM withdrawal or checks that have yet to be cashed.

Differentiate between debit and credit. Explain the differences and give teenagers a debit card for regular expenses rather than a credit card. Set any credit card limit at $1,000 to prevent overspending and implement realistic consequences if the limit is exceeded.

Review monthly statements together. Focus on how much was spent rather than on how it was spent. If your student has a part-time job, compare the amount he or she makes with the amount he or she spends.

Be a role model. Set a good example for teenagers and include them when making financial decisions. Inform them of the bills that need to be paid and daily costs that the family incurs. Suggest natural consequences if mistakes are made and keep the lines of communication open.

COPYRIGHT 2005 Society for the Advancement of Education
COPYRIGHT 2005 Gale Group