Spending, Saving and Scores: Help Your Young Adult Child Build Good Credit


Spending Saving and Scores Help Your Young Adult Child Build Good Credit

You always want your kids to get a good start in life and there are ways to help make that happen, including giving them a lesson in how to manage money and handle credit.

Here is a look at how to teach your young adults the importance of balancing the books. Including a look at why credit scores are so important and how you can work with them to build up their profile. Plus some strategies for financial independence and why you need to talk to them about the cost of borrowing.

Building a good reputation

Building a good credit score is something that you have to do over a period of time and then work at to preserve at all costs if you can.

It can be difficult for young adults who are students and just getting to grips with handling their own money, and a lot depends on how confident you are that your child is ready to take responsibility and build a good credit profile straight away.

A good first step to consider if you have any concerns about how responsible your child will be when they first get access to a credit card and a line of credit is to do the next best thing to holding their hand for a while, in a financial sense.

Help them get started

A possible solution would be to allow them to become an authorized user on your own credit card or bank account.

This scenario has some obvious pros and cons, not least the fact that you are assuming responsibility for their spending, but at least you can apply an element of control and guidance by monitoring how they fare with money.

This might be the only option available anyway after the Credit Card Act imposed a new rule that anyone under 21 years of age needs to have a co-signer or be able to demonstrate they have an independent income.

If your own finances need a bit of sorting out, this might be the opportunity to consolidate your debts so that you are better placed to help your kids if they need it.

Open their own savings and checking account

If they are going to become financially independent and build their credit score to a good level, one of the ways to make this happen is to suggest your child opens a savings and checking account.

Establishing a good banking history is one of the cornerstones of a good credit score and when they have to take care of their own money this is a great way to get them into the discipline of budgeting and learning how to spend wisely.

The value of money

It is always a good idea to educate your child on the basics of how credit works and the costs attached to borrowing money.

Talk to them about the importance of paying off their credit card balance and illustrate how long it will take and how much it will cost them in interest charges if they only pay the minimum balance back each month.

You have brought your child up well and now they are a young adult, you still need to guide them on good financial management so that they can build a good credit profile and enjoy a brighter future.


Anthony Farmer is passionate about raising smart kids who know how to handle personal, everyday finances using real life examples that they will encounter as an adult.


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