The age group of 18-34 referred to as millennial are living in a whole new hyper connected world. In this new age, the millennial are used to instant gratification with products and services veered towards their preferences. This is especially true for financial services providers who have had to change their product offerings drastically over the past few years to cater to the young and restless.
Most millennial get a Credit card in the first few months of their job and are unabashed about its use. Anecdotal evidence suggests that within the first of service they avail of a loan either to buy a to wheeler or a car loan. Thus, before they are 25, millennial are already servicing two or more lines of credit. If you thought, catering to the fast changing needs of this demographic is difficult for financial service providers, there is a whole new generation post millennial born post the year 2000, who are either in their teens or are stepping into adulthood this very year.
For this generation, popularly referred to as generation Z, credit has been an intrinsic part of their lives. Especially for urban teens who have grown up witnessing their parents liberally using credit cards to buy everything from groceries to gadget online. This is beside servicing secured loans such as a home or a car loan. Thus grasping the concept of financial discipline is a tall task, because credit usage has not been the chosen topic of conversation around the house for most urban parents.
Unfortunately, therefore a large number of teens have grown up believing that everything is easily available at the click of button and credit is easy to come by. Thus, they seldom find the need to learn about credit availability and most importantly, the need to maintain credit discipline.
The onus, therefore, lies on the parents to educate their children from a young age about the merits of building good credit. It is up to parents to make them credit ready and also get them started on building a good credit record from a young age. In this modern age, when children are exposed to multiple mediums, the question is not “when” to educate them about credit but “how” to go about it. Here are a couple of tips to go about it.
Judicious use of credit
The first thing that needs to be learn about credit usage is the need to be prudent. If your kids are tweens or teens who are just learning the joys of shopping online and often use your credit card for the same, get into the habit of reading credit card statements with them. The point is not to admonish them but to show them the purchases made within the billing cycle. The other important message to get across is the importance of making repayments in full within the billing cycle. This is the first lesson that you kids need to learn in order to maintain an impeccable credit record lifelong.
You may even consider giving an add on credit card or a secured credit card to an older child who is pursuing higher studies and is only a few years short of financial independence. This will teach him or her responsibility with credit and will still keep the reins of financial control in your hands.
Keeping a check over credit records
This is also one of the basic and crucial lessons you need to dint into your kids from an early age. In this fast changing world, credit usage will assume greater proportions in the days to come. As a result credit score and credit report of an individual will become an even higher barometer for credit assessment in the future. In fact, the day may not far away where one’s credit record would determine much more than his ability to access any kind of credit.
Therefore it is of utmost importance to keep a hawk eye over one’s CIBIL report. Get into the habit of reading your credit report periodically with your children and teach them how to decode it. As a parent, it is good to set an example by reviewing your records bi-annually. You can avail of the facility of checking one free CIBIL report in a year and review your report as many times as you deem fit. This is especially important just before you avail of any new line of credit, just to ensure that your credit application goes through without any glitch.
As a parent, you want to ensure that your kids have the very best in life. But in the heart of hearts, you know that they will have their own battles to fight. All you can do is to prepare them with the best training that you can possibly provide. Thus, providing them credit training is one step closer to ensure that they remain financially healthy throughout their lives.
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