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Young
Children Do Not Understand the Concept of Credit
Cards
It’s the 21st century, and most of the kids living
in the United States are constantly watching their
parents put a cute little plastic card into an
automated teller machine and seeing the machine
instantly spit out a wad of cash. It’s like magic!
A machine that gives money whenever anybody wants
it!
The
concept of “the money that comes out of an ATM
really comes from a bank account that holds money
which was earned by working” is difficult for many
young children to understand. Likewise, it’s hard
to comprehend the notion that swiping a
credit card
in a machine at the store really means that mommy
or daddy will get a bill in a month that must be
paid with the money earned by going to work.
Life these days is so electronic that many parents
wonder how their children will ever grasp the
complexities of how internet banking, automated
teller machines, and
credit cards
work… even in the simplest terms. However, several
experts in this field have come up with tips on
how to teach children the value of a dollar, how
to save money, and how the concept of a credit
card works. Learning how to understand these
concepts and how to be responsible with money at a
young age is knowledge that can help children
succeed and prosper for the duration of their
entire lives.
Make it Fun
Taking a small child who is learning to read and
recognize numbers to the grocery store is a great
and fun way to teach them about comparison
shopping. While in the store, show the child a
shelf containing many bands of the same item. Have
him or her look at the differences in prices
between all of the similar items. Talk about which
one should be chosen for purchase, and why it is
better… because of price, quality, or quantity
included in the package.
While at the grocery store, allow the child to
watch the checker scan all of the items, and
explain that a computer is keeping track of all
the prices associated with each item in the cart.
Then, when it is time to pay, allow the child to
swipe the credit card for you. This is a good
opportunity to tell the child how a credit card
works, and that eventually the credit card must be
paid with real money.
Give Children an Allowance
When a child is given his or her own money to
either spend or save, he or she begins to feel a
sense of responsibility. Even if the allowance is
small - - only a few dollars a week - - it will
fill the child with ideas on what he or she wants
to purchase with his or her very own money. This
is also a good time to explain saving money to a
child. For example, if the child is given two
dollars, he or she should feel free to spend one
of them, but be encouraged to save the other one.
Then, the spare dollar can be placed in a bank
account and the child can watch and learn about
interest earned on money in savings accounts.
“I
Want it NOW!”
Many young children know the concept of, “I want
it NOW,” very well. Especially if the item is
expensive and the child does not have enough money
to pay for it on his or her own. This can be a
prime opportunity to teach the child the
difference between “wants” and “needs.” It is not
a good idea for a parent to step in and pay for an
item that falls into the “wants” category just to
immediately satisfy the child. Teaching a child to
save their money over time for something that is
desired is a way to encourage good spending and
saving habits.
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