In an effort to give their children a financial head start, approximately 25% of parents have authorized minors under the age of 18 as users on their credit or debit cards, according to a survey conducted by LendingTree. Shannon Ho exemplifies this trend by adding her daughters, Aria and Gemma, as authorized users on her existing accounts. Through real-life shopping experiences, Ho aims to instill valuable lessons about money management and the importance of understanding credit from an early age. Financial advisor Winnie Sun supports such practices, emphasizing that a strong credit score can lead to better financial opportunities in adulthood.
Empowering Young Children with Financial Knowledge
In the bustling city life, Shannon Ho plays pretend shopping games with her daughters, turning these moments into meaningful financial education sessions. At just two years old, Aria actively participates in weekly trips to Target, where she selects items and pays for them using her own credit card. This hands-on approach helps her build a credit history while learning the value of money. Even though Gemma, at one year old, doesn’t fully grasp the concept yet, both girls benefit from being added as authorized users on their parents’ accounts.
Financial advisor Winnie Sun compares a credit score to a "financial GPA," highlighting its significance in securing favorable mortgage rates, car loans, and even employment opportunities. Banks like Capital One, Bank of America, and Chase allow children to become authorized users provided they have a Social Security number. For parents considering this step, it’s crucial to maintain timely bill payments and closely monitor account activity to avoid any potential negative impact on their child's future credit standing.
From a journalist's perspective, this practice not only fosters financial literacy among young generations but also sets the stage for responsible spending habits. It serves as a reminder that teaching children about money early on can lead to a lifetime of financial security and informed decision-making. By empowering kids with knowledge and tools, parents are investing in their long-term success and independence.