No Money? Just Use Your Credit Card!
October 2nd, 2012 - Category: Money
Have you ever told your children that you couldn’t buy them something because you didn’t have the money? Only to have them look at you confused, and point out that the plastic cards that you always buy things with are in your wallet.
I don’t know about you, but I rarely have cash in my wallet anymore, but I do have several debit and credit cards lining both sides. After my child’s response to, “just use your credit card Dad,” I realized that I needed to teach them what exactly a debit card was, what a credit card was, and how they related to having money to spend.
Here are some definitions that are easy to understand that you can use when explaining to your children the difference.
When we work and get paid, we put our money in the bank. The bank holds our money in an account until we are ready to use it.
A debit card is a plastic card that is used to buy something. When we use our debit card, the amount that we have to pay the cashier is immediately taken out from the bank account that it is linked to.
A credit card is different from a debit card because purchases are made on credit, which means that the money is not ours, it is borrowed. We have to pay back the money that we use, plus extra money, that the bank charges us for borrowing it.
You can set up an online chore chart and assign each child chores to do. When they finish their chores, they can choose to save, or put their money in the bank, share with online charities, or spend it, just like using a debit card.
And what’s even better, is that as a parent you have the ability to track, encourage, and teach them about their choices all along the way.
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