On any given day of the week, a person’s mailbox can be flooded with different offers for credit cards, loans and more. Each one has its own terms and conditions that people have to follow, but unfortunately, many individuals don’t know all of the points of the policies related to financial arrangements they make. This can spell big money trouble later on. To avoid this type of problem, kids have to learn how to literally read the fine print.
One of the biggest reasons people don’t look in depth at the terms and conditions for things like gift cards, credit cards and traditional or online subscription programs is that, simply put, they’re busy. Really busy. It’s not unusual for both parents to be working in the modern home, and when errands, kids’ extracurricular activities and general household responsibilities are factored into the mix, there’s not a whole lot of time to spend reviewing documentation. Even when parents and guardians are responsible and look in depth at everything to which they commit, they don’t always have the chance to sit their kids down and explain the complexities of what they’re doing.
Another problem that keeps parents from teaching kids how to look into financial policies is a lack of consistent budgeting. Even in the wake of the Great Recession, many families still do not set and stick to a household budget. This failure can happen for a variety of reasons, including not looking ahead to irregular expenses, not setting specific times or methods to make payments consistently and, quite frankly, being unrealistic or dishonest about spending habits and income. Families who do not make an effort to form and enforce a budget usually do not take the extra steps to review the policies that could make the plan more effective.
Despite these hindrances, kids can get enormous benefits from learning how to be critical of the details in financial offers and agreements. For starters, kids generally are more motivated to stick to a financial plan if they have a goal in mind. When children pay attention to specific policy points, they’re in a better position to make a clear roadmap toward what they want to accomplish with their money.
Secondly, kids who pay attention to the fine print on money issues are less likely to be hit with interest, late fees and other charges or penalties. This is true for adults, too, but it’s more important for kids, because they simply don’t have as much income and, therefore, need to be even more critical of money handling in order to meet needs and wants. It’s also vital because learning how to avoid these types of unnecessary expenses early on can set the tone for a lifetime of financial management.
Reviewing details also matters because it empowers the kids. Children are already at a disadvantage when it comes to money because they simply do not have the life experience that many adults use to make good financial choices. They are more emotionally based. Looking at policies develops their rationalization and logic skills, giving them a tool they can use to keep emotional spending and commitment in check. When they can do this, they are no longer at the mercy of the companies that fight so aggressively to get their attention and make them loyal customers.
Related to the idea of empowerment is the fact that policies are not the same from company to company. In fact, it is the differences in policies that let consumers decide what is best for them based on their preferences and circumstances. When kids know how to look at terms and conditions, they can begin comparing different offers and businesses as a whole. This comparison is a big key to getting the right deal at the right time.
In short, teaching your kids to look beyond the initial “Buy now!” commands of modern business puts them in the financial driver’s seat. Even though you might have to simplify a lot of contracts you get into layman’s terms for your kids to understand, it’s important to make them part of your regular financial discussions.