3 Lessons About Credit That You Should Teach Your Child

Since credit will be a constant in every person's life, teaching your kids about it early is crucial. Without knowledge of how credit works, they won’t have a good foundation for understanding the financial burdens that come with misusing credit.

While it is impossible to raise a child to be a perfect adult, you can create your own steps for making sure that your child becomes a responsible adult. One crucial step you can take is to start a conversation about credit with your children, even if they are at a young age. Here are some important lessons you can teach your children about credit.

Lesson #1: The Basics of Credit

Start a conversation with your children about credit by introducing the very basics of it. Credit is money that is borrowed from a lender and that needs to be paid back within a certain period of time (usually in the form of interest). When you use a credit card, you are taking out a loan from the bank or the company that issues the card. Instead of paying for everything in cash, you pay back the money you borrowed in monthly installments.

The lesson for your children here is that credit cards are not free money. If a child wants a piece of clothing or a new toy when you are out, you can encourage him to save up his money from his allowance to purchase the item he wants. It may seem like an insignificant lesson, but it will help teach your child the basics of spending and saving work.

Lesson #2: The Danger of Debt

Once the basics have been covered, you can move on to lesson #2: the dangers of debt. When you buy things using a credit card, you are using money that you haven't yet earned. When you use credit to purchase something, you are borrowing money and taking out a loan. Many people find that it is easier to use credit than to save up or work extra hours to earn the money that they want to spend.

When a person does not have any money saved up to purchase something, he will usually take out a loan. However, this debt can come back to haunt you. Paying back a loan will eventually require you to get a job and earn money. If you don’t have enough income to pay back the loan, the amount you owe will accumulate even further until you can find a way to pay it off. This is a dangerous path that can lead to a financial meltdown.

Lesson #3: The Value of Saving

The third lesson you can teach your child about credit is the value of saving. When you use a credit card, you are taking out a loan, and you need to pay it back by the end of the month. If you can’t afford all of the bills, you can use a credit card to pay the minimum amount due. This can sometimes be the easier way to handle finances, but it comes with a heavy cost.

By not saving and instead using a credit card, you can accumulate a large amount of debt. You will also put yourself in a position where you have to work to pay off the debt. Finally, you will also miss out on the valuable benefits of saving up your money. When you save up your money, you get to learn the value of saving and the reward of delayed gratification. By sacrificing the purchases you can make in the present, you can have a lot more money to work with in the future.


When you teach your children about credit, you can help them to avoid the pitfalls of misusing it. As an adult, your children will need to manage their own credit. When you help them to make good decisions about it, you can give them the skills they will need to succeed later in life.

If you want to teach your children about responsible financial management, Kiddie Kredit has the perfect solution for you. We give you a mobile app designed to educate children and empower families with money management skills. This is the perfect tool to teach your child and your family about the importance of saving and credit. Download Kiddie Kredit today and start your child’s financial education early.

John D Saunders

John D. Saunders is a Web Designer and Founder at 5Four Digital, CMO at Kiddie Kredit and an Automation Expert with a decade of experience building brands online. He's worked with clients including Audi, NAACP and Apps Without Code.