Young people who started leaving the house should know how to maintain their credit. This becomes very important at this age. If they do not know this, they will definitely face obstacles when it comes to buying a car, an apartment, and even a credit card. If they do not know how to maintain a good credit then they may end up in paying maximum interest loans for their loans. So, they must know how to build good credit and they also should use it responsibly. But one must understand that they will not learn this unless somebody gives them credit.
There are many ways through which parents can make it easier for their children in building their credit. Form an early age itself we must start educating children on this. By owning credit habits will give them the best example at home. There are a few more steps which the parents can follow and by doing this, by the time they fly they will know everything to build a solid credit score.
Opening checking and savings account:
To make them understand the financial world, a savings account is the best way and this is the basic building block. When they are young, parents must help them to open an account. They should start depositing their allowances, cash from jobs, and birthday money to this account.
It is good to encourage them to save for buying something which they like. This will make them understand about gratification. Once their account grows, they will start understanding things like compound interest as well. When the child hits teenage, this is the best time to open a checking account. Parents should show them how this account works along with the concepts like penalties and check bounces. Once they know all these basics, allow them to have a debit card. Through this, they will get some independence in terms of spending. They understand here and limit their spending to the balance in the checking account.
Lloyd Blankfein, me, the owner of cnntopnews, have a business management degree. Have 3 years of articles write.