Do you have a lot of debt and loans to repay? Is it affecting your credit score and making it difficult to get more credits?
Well, you are not the only one who will suffer due to your numerous debts or bad credit score. You might have accepted your fate by now thinking that it is okay and that you can recover in future but this is not true. It is not okay to keep debts as it can have a serious impact on your kids as well. Your kids are impacted by your financial status, debts, and credit rating which is why it is important that you set a good financing behavior for them to learn and follow.
We all are aware of the fact that kids learn from their parent about various things in life and how to manage each situation. So, it is only natural that your kids are likely to pick up your financial habits as well and might believe that having debts or bad credit rating is okay when the opposite is true.
The information that your kids will learn about finances and how to manage them while growing up plays a major role in their own financial behaviour. So, if your kids see you spend unnecessarily or borrow money too often then they are likely to imitate this behavior too. Make sure that you don't set such a bad example for your kids and always plan and budget your finances to impart this lesson on your kids as well.
In fact, several researches held for this have confirmed this theory. The researches show that the habits of parents regarding financial matters plays a direct and an indirect impact on the kids and defines the parent-children relationship. Another research shows that the the parents’ credit has a socioemotional impact on their kids.
Basically, kids might prosper in an environment where there parents own a decent car and have a good educational background with a few student loans but children whose parents have several unsecured loans tend to suffer from poor socioemotional health.
This is because parents who have more debts tend to experience stress and anxiousness and don't spend quality time with their kids. As a result, they are unable to display good parenting behavior which can have a grave impact on the children's well-being. Apart from having a serious effect on their mental and emotional health, having poor credits can also lead to lost chances. Due to bad credits, you won't be able to provide your children with basic requirements like school supplies, medical care, etc.
Also, once your children grow up, your bad credit score can even affect their ability to get credit. If they need a co-signer to apply for student loans, car loans, etc. then your bad credit score can make it difficult to obtain such loans at a reasonable price.
Planning to set a good example for your kids by repairing your credit? If yes, then you better start by avoiding any impulsive shopping and try to buy things only on credit if they are necessary. This will not only help in improving your credit score but will also set an amazing example for your kids as well. Apart from this, there are a lot of other things that you can teach your kids so that they are able to handle their credit and debts in the long run.
Here are a few major credit things that you should discuss with your children from the start:
1. Make Them Aware About Finances
Make sure that your kids understand the important of finance early on and have a basic idea of different monetary aspects. Ensure that they understand the idea of earning money, getting credits and loans, borrowing money, and repaying all the debts.
You can give your children an emergency credit card to make them responsible and review it monthly. Teach them about the interest rates and why it is important to make monthly credit card payments for maintaining a good financial status.
2. Discuss the Importance of Credit in Their Life
Another important thing that you must discuss with your kids is the importance of credit and how it affects the different aspects in one’s life. Ensure that they know that credit plays a major role in getting a job, apartment, securing loans, etc. and teach them a few good credit habits to take up in the long run.
3. Discuss about Credit Report and How to Monitor it
You also need to explain to your kids how credit report can be monitored and what essential information is stored on it which will affect their credit score. Tell them about the different resources which are present if they wish to get a free credit score and teach them how to review it.
You can make them review your own credit report in the starting to get a better idea. One important thing to tell your kids is that getting a good credit score from the start and maintaining it is easier than repairing a bad credit score. So, motivate them to keep a good credit score from the start and not to lapse after some time.
4. Explain them about Identity Theft and How to Avoid it
Let's face it, kids are usually not aware of what is sensitive information and what is not which is why it is important that you teach them early on what information can be shared and what should be kept protected. Protect your kids from impact of debt with hello of any of the best credit repair companies in the market.
Once they get a little older, you can also discuss with them the different ways in which criminals attempt identity theft and how they can protect themselves against it. Identity theft is one of the most common crimes committed so it is important that your kids are aware of it.
5. Never too late to Repair Your Credit
This is one crucial information to share with your kids. While maintaining a good financial habit is necessary, let your kids know that mistakes do happen but that doesn't mean the end of the world.
They can still improve their credit rating. Make sure that they learn the consequences of having too much debt and learning from the past mistakes to ensure that they use the credit responsibly in the future.