Plastic has in many ways taken the place of hard cash. While credit cards protect you to some extent from pickpockets and such and have advantages, it is important for children to learn early the subtle nuances of credit cards.

Early education on the handling of money and the knowledge that credit cards are to be used wisely will help ensure that the kids don’t go into credit card debt or tread the path to financial ruin.

According to experts always introduce the world of credit cards to a child when he or she turns 18, give them a card with low credit. Begin the learning experience when the child lives with you and not when beginning college and staying away from home. Inculcate the importance of being independent and responsible enough to manage money. If kids learn at an early age the need to establish and build credit they will never face any strife and will be able to be responsible adults.

In order to use the first credit card wisely a student must:

1. Acknowledge that the card is for use in emergencies and not an extension of spending money. It is important for a student to realize that the card must only be used to the extent that he or she can settle the bill in full at the end of the month. It is crucial for a child to live within his or her means.

2. Learn the role played by credit reports and scores in life and begin to build a good report from day 1. A solid payment history will enable the student to set the foundation for a good credit score.

3. Realize that a card is not available to pay for purchases that cannot be paid in cash or to pay for tuition and living expenses. Money must be used in a budgeted way and the rule of thumb must be “live within your means.”

4. Know the importance of wise spending and that he or she cannot lean on parents and expect then to constantly bail him or her out of a situation.

5. Create an expenditure budget for every month and learn how to balance money spent with money available.

6. Only use a card in emergencies and purchase only what can be purchased in cash. Overspending is a definite “NO” and one must learn to do without.

7. Learn the importance of saving and the habit must become ingrained. Kids must be encouraged to set aside 10-25% of their allowance or earnings each month and learn when and how the money must be used.

8. Know as much as possible about how credit cards function and all about late payments, interest accrued, reward points, and billing cycles.

Statistics reveal that only 13% of students use a credit card sensibly and that too for emergencies. Over 79% of students are irresponsible and need to be taught the importance of using a card wisely. It is important to inculcate from a young age that money power is to be wielded wisely.

Although schools have programs in place about handling finance it is up to parents to not just teach the children but to keep an eye on whether the child is straying from the right path where money is concerned. It is important for teens to stray clear of the buy know pay later attitude. Debt is a monster and no child should begin life in debt or seek bankruptcy protection.