Better Money Habits

My first lesson in understanding the way banking and spending works was at the age of 11

on a trip to the mall with my mom. I saw a pair of black suede short boots I just HAD to have. Yes, it was the 80’s. And yes, they were totally awesome! When my mom said no to the boots because she didn’t have the extra money, I was not fazed. I had the easy solution: I told her to just write a check; I mean, she had a whole box of them.

No problem. It was at that moment my mom explained to me that this was not how it all worked. Checks don’t mean you have money to spend on a whim. You actually had to have money already in your account in order to back up that check. This was something I had never considered before, but that old idiom about putting your money where your mouth is really started to click then.

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Spending money we don’t actually have has become a common practice in our society

We charge something on a credit card that we know we won’t be able to pay off for a while; we overdraw our checking account with an impulsive online purchase, knowing it’s going to cause an overdraft fee. We want what we want, when we want it.

However, it’s not always the unnecessary purchases that dent our cash flow. On top of the typical monthly expenses, sometimes things come up that we must pay for, like new tires or a hospital visit. If we don’t have the cash on hand, our only option is to turn to a credit card or loan – unless you have a rich and generous family member.

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My next lesson came during my senior year of high school

when my history teacher took some time as we neared graduation to lecture us on credit cards and getting into debt. He spoke about how we would all begin receiving credit card offers as soon as we turned 18; about how easy it is to become overwhelmed with credit card debt and how hard it is to get out of it. I can’t speak for the rest of my classmates, but I, for one, wish that I would have heeded his advice – or at the very least that I had taken it upon myself to learn more about the world of credit and finance at that time.

When I turned 18 and had been in my first full-time job for about a year, I was ready to become a first time car buyer. It was then that I found out what credit is and that I actually had no credit score.  In order to even get a car loan, I would need to have my parents cosign. My dad agreed, but made a point to inform me that if I was even one day late on that car loan, I would have to answer to him. It was fair, since my payment activity would affect my parents’ credit. I can honestly say that I didn’t really understand how it worked; I just knew that I better not be late with a payment, or I would be answering to Dad. Needless to say, I made each payment on time. This ended up paying off when I was ready to purchase my next car, because I was able to go it alone, no cosigner necessary. That was a proud moment for both me and my parents.

Just as my wise history teacher had said, those credit card offers began coming in when I turned 18. As you probably already know, credit card offers are a constant in our adult lives. We are sent offers through the mail, email and in person. Most department stores ask you at the register if you would like to apply for their store credit card in order to receive a discount on your purchase.

According to a 2020 report from USA Today, the average American has about $6,200.00 in revolving credit card debt. Credit cards can be absolute lifesavers in an emergency situation, but when used for our daily or unnecessary expenses, we slide down further into a mountain of unsecured debt. Climbing out of that debt is much harder than it was sliding into it.

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education for our youth regarding the importance of budgeting, saving and paying bills on time is sorely lacking

Too many young adults are left to figure it out as they go along, and by the time they do understand how it all works, they’re buried in debt. Several years ago, I taught a class at Fresh Start Women’s Foundation in Phoenix, an amazing non-profit organization that offers women support and educational tools for improving their well-being. There were so many women with the same story; they did not realize how not paying on time or maxing out a credit card would affect them long term. Now, they were in serious debt or unable to rent an apartment due to poor credit. Our credit report tells a story about us and is a tool for lenders, landlords, and potential employers to gauge if they are willing to take a chance on us. That $500 credit card you walked away from at 18 years old can haunt you for years to come. The most common question I received while teaching this class was about how to rebuild credit.

By focusing on beginning this education at a young age, we are able to instill healthy habits that will carry on into adulthood. We should be preparing our youth for the adult world and giving them the knowledge and tools to succeed.  Setting savings goals, sticking to a budget, borrowing, and building their credit are just some of the skills we should be arming our youth with in order to prepare them for long-term financial success.

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i encourage you to do some research

and decide on the best route to educate your child and increase the odds considerably for them to develop healthy savings and spending habits. There are many options for education, online and government resources, as well as education offered by banks and credit unions.

I am proud to say that SunWest Credit Union offers youth accounts and education, as well as a variety of ways to build or rebuild credit. Helping others learn and grow is our passion, so don’t hesitate to reach out. You and your children will reap the benefits for years to come.