Would you give your 14-year-old a credit card? How to make it work! The Wall Street Journal

My 15-year-old son has taken to internet shopping like a duck to water. Almost daily, parcels arrive for him. This week, a little bracelet for his girlfriend and a big box of protein shake mix to enhance his body-building work in the gym were among the little treats that turned up at the front door, thanks to his purchases on his debit card. Lazetta Rainey Braxton, a writer for The Wall Street Journal has gone a step further – she has given her 14-year-old a credit card. Brave Braxton! I'm not sure I'm ready to unleash my shopping-mad, if adorable, teenager on my credit rating. But Braxton does have a point: the sooner people learn how easy it is to amass debt using a plastic card, the better. In the meantime, Nic's keenly aware that his pocket money doesn't go far, as his funds dry up regularly, prompting requests to do more chores so that we can top up his account for services rendered. – Jackie CameronWhy we gave our 14-year-old a credit card ___STEADY_PAYWALL___.By Lazetta Rainey Braxton*(The Wall Street Journal) – On our daughter's 14th birthday, we took her to the bank to do what many parents do – open up her first checking and debit-card account with the birthday money she received from her grandparents. But we took it a step further and also handed her a credit card embossed with her name as an authorised user on our account.Are you gasping at the idea of giving a credit card to a 14-year-old? Our daughter was. As parents, however, we were excited about giving her the gift of financial responsibility.The responsibility of debt overwhelms even the best of parents; bringing children into the credit equation adds an additional degree of complexity and possibly headache. In fact, many parents don't extend their credit to their children until they are headed off to college, while others expect their children to secure credit on their own merit in college. And there's no shortage of credit-cards offers for students in college.The problem is that for people new to credit (and even those not so new), it's easy to feel the euphoria of swiping a card for new purchases while simultaneously feeling numb to the ballooning balance. And finding the strength and resolve to manage debt can take years, decades, or even a lifetime. So wouldn't it be safer to have children learn and practice good credit habits under adult supervision rather than finding out the hard way with no support?While we recognise that both debit cards and credit cards allow for cashless transactions (the desired method for Generation Z), credit cards provide better protection from fraudulent activities. So if our daughter's credit card is lost or stolen, we're covered. Also, the economic perks we received from consolidating transactions with one credit account (points and miles) offsets the annual cost of the card. Our daughter continues to have use of her debit card if she desires to use it.More importantly, we see the credit card as an extension of our daughter's financial-management habits. Starting at age 12 (before opening her own bank account), we gathered together monthly for a "money meeting" to tally allowances, financial gifts and money received for small tasks. She saved 10% (parents deposited the money in her custodial account), donated 10% (she completed her own church envelope), and divided the 80% between her short-term spending and long-term spending (she held the cash).Now, she uses her bank account and credit card to manage her spending. We transfer to her bank account the portion of the household budget that pertains to her expenses, which include personal care and clothing. She is responsible for managing her budget and paying her portion of the credit-card bill via bank transfer. While she doesn't have a specific credit line, she does have a spending limit that we monitor. She can only charge an amount that she can pay in full each month, based on her household allotment and her personal funds.While the credit card gives our daughter some financial independence, it also gives us an easy way to monitor her potential abuse of credit by overspending. I saw signs early in our daughter's life that she prefers nice things. Confession: My husband and I have raised her in a middle-class life, while we come from modest financial backgrounds. But since I did the swiping of the credit card, she only experienced the enjoyment of the purchase and not the responsibility of paying for it. She had no clue that she was susceptible to overspending based on her taste and our family's income.Finally, our daughter doesn't have to be afraid of making financial mistakes, which is, for us, the most important reason to give her a credit card. By tying money management and responsible credit-card use at the young age of 14, our daughter will have our guidance for four years prior to being an independent college student when credit becomes easily available. If she overcharges, we will serve as her "overdraft protection" and assist her with getting back and staying on track.Although she was initially afraid to accept the credit card, it boosts her confidence as a money earner and money manager. Our daughter uses the credit card, mindful that she has received a gift of a (financial) lifetime.Lazetta Rainey Braxton is the founder and CEO of Financial Fountains, an independent fee-only financial planning and wealth management firm. You can email Ms. Rainey Braxton at reports@wsj.com.

Would you give your 14-year-old a credit card? How to make it work! The Wall Street Journal

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