Tips for keeping teens out of credit card debt

Step One
Share your knowledge with your teen. Teaching your teen financial basics is another area of parenting where you must be actively involved and committed. A teenager should be educated and experienced in earning, saving, spending and paying bills before he turns 18 and heads out on his own, either to college or the workforce.

Step Two
Fashion a realistic budget with your teen. Explain the importance of spending only as much as she has and of maintaining a savings account for emergencies. Encourage her to obtain a job, either earning money around the house or outside employment, so that she can spend and save her own money.

Step Three
Open a checking account for your teen. Take him to the bank and teach him how this is done. He can then learn the essential skills for writing checks and balancing a checkbook.

Step Four
Hand over the debit card. Once your teen has worked with her checkbook for a few months and has shown you that she can be responsible with writing checks and managing the ledger, she should get used to paying for purchases with a debit card. It looks and feels like using a credit card, but is directly linked to her checking account.

Tips & Warnings
Encourage your teen to pay cash, use her debit card or write a check for as many purchases as possible. She will not spend as much and the temptation to spend more than she earns is taken away.