Why you should give your teen a credit card

It’ll help them budget and track their spending



From the September/October 2016 issue of the magazine.


Listen, we’re already living in an almost cashless society. Giving your kid $10 or $20 or $50 a week in allowance will teach them a thing or two about budgeting, but it won’t teach them some of the modern skills everyone needs to understand now, namely the impact of interest, annual fees and how to get the best shipping rate on Amazon. So here’s an idea: Give your kid a low-limit credit card. As little as $300. It will allow them to budget monthly, track their spending, as well as buy stuff online, subscribe to Spotify and collect rewards. Then, instead of giving an allowance, tell them you’ll put $200 in their bank account each month to pay the bill. If it’s not enough to cover it, they’ve just stumbled upon a great lesson about carrying a balance. As for them getting in over their head, there’s a very real reason they won’t: It’s not their card, it’s yours. In most Canadian provinces, you need to be 18 years old to be a primary cardholder (19 in the rest). That means the card will be in your name, so you can cut it up anytime.

More tips on how to raise money-wise kids:

Ages 0 to 6: My first money moves »

Ages 7 to 12: Saving not spending »

Ages 13 to 17: Big kids, bigger budget »

Ages 18+: Preparing to launch »

How to explain…

Basic budgeting to kids »
Compound interest to kids 
Net worth to kids »

Ways your kids can earn and save

Run a successful lemonade stand »
Save money at school  »

More tips:

How can I avoid money tantrums? »
Should you pay your kids to volunteer? »
Should I buy my 10-year-old a smartphone? »
Does my kid need a clothing allowance? »
My kid called from college and is broke again »

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