As you know from some of my posts, I am very open when it comes to discussing money issues with my children – especially my seven year-old, Ava. Some of the things I have discussed with her include ways to save money, our monthly expenses and student loan debt. Recently, the opportunity came in which we were able to discuss credit card debt.
I drive Ava to school most mornings. One day last month Tracy was taking Ella to the dentist during the day. On the way out the door, I told Tracy to use the credit card to pay for this. When we got into my car, Ava said, “I thought credit cards were bad to use dad.” You can tell whose daughter she is, huh? Whenever such an opportunity arises, I make sure to use it as a teaching example.
I explained to her that yes, for many, credit cards are not wise to use. A lot of people use them without having the money to pay them off in full each month. I then told her that Tracy and I have two accounts at the bank – a checking account and a savings account. I have divided the money we have in our savings account into different categories including medical (other categories include expenses I know will come out including car insurance, Christmas and vacation). I went on and explained that I get paid once a month and, instead of constantly transferring money from our savings to our checking account, Tracy and I keep track of what we put on our credit card – this is written down on a post-it note that is in our check register – and just transfer this entire amount over at the end of the month to pay-off our credit card in full.
I pointed out to Ava that the most important point is we know we have the money to pay for anything we purchase on our credit card. People that buy things knowing they don’t actually have the money to pay for them usually end up in trouble. Ava then showed me that she understood how important this was by saying the following, “Dad, those people that don’t pay off their credit cards each month can lose their house.” Wow, pretty deep for a seven year-old.
Once again, this conversation was a reminder that our kids are listening more than we think and understand a lot more than we give them credit for. Yes, Ava may have been stretching it a little bit by thinking that anyone who does not pay off their credit card each month will eventually lose their home; however, I was not about to correct her. I would love for her to continue to think this way. If she continues this line of thinking, she will hopefully never buy something that she does not have the money for because the fear of losing her home will come to mind. I would much rather her be wrong in this assumption than buy things she cannot afford. You see, if she does the former she may one day lose her home. If she does the latter, the odds of that happening are slim to none!