Tuesday, March 22, 2011

The Importance of Parental Influence

This is kind of weird to admit, but I didn't know that you can OWE money on your credit card for more than a month at a time until I was a teenager. Before that point, I always thought you spend what you can afford and pay it back in full at the end of the month (I guess you would call this a charge card). Okay, now that I've admitted that, you may think I'm not too bright. Or you may think that our educational system should focus more on personal finance. One of those statements is true. Yeah yeah, take it however you want, but I insist my thoughts were heavily influenced by my parental unit. So forget what it says about me. The real question should be what's that say about my parents? It could mean a few things:

  1. They're extremely responsible credit card users.
  2. They wanted me to understand the value of hard-earned money before I learn about debt.
  3. They didn't tell me the whole story by explaining to me more clearly the full purpose and intention of credit cards. (Euphemism for the lying, I suppose) 

Children often learn from their parents’ example, and my parents only use cards to build credit. Believe it or not, even though I didn't have full knowledge of how credit cards function back then, I’m extremely grateful to my parents now. Because of them, even today, when I KNOW that I can borrow money and pay just the minimum amount every month, I feel uncomfortable doing so. It's not just because paying interest is painful, it's also because I've been taught to only spend what I can afford. I remember being scolded for borrowing money from friends in elementary school, even if it's just a dollar or two. So, besides getting a mortgage or a loan for a car, borrowing from a lender never really existed in my vocabulary.

As to my parents not explaining the full usage of the credit cards to me earlier in life, I believe it's excusable. I feel that the lessons of borrowing and interest should come after kids have a real grasp of the concept of "money doesn't grow on trees." This way, they’ll spend more wisely and only borrow when it’s necessary to do so.

Perhaps, this is why many people advocate better financial education for children both in school and at home. Part of everyone's financial identity is what they see and learn at a young age. If we start kids off with the concepts of saving, spending, and simple budgeting earlier in life, maybe they'll have a greater chance of succeeding financially in the future.


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