For today's consumers, teen credit cards are as common as iPods and MySpace accounts. One out of three high school seniors has a credit card, which is why it's critical that parents teach their children a fourth R-responsibility.

Good parenting involves explaining consequences to children. Traditionally, parents discuss the ethics of cause and effect about sharing and respectful behavior. Since credit cards are now ubiquitous among teenagers, it's time to nip any mismanagement in the bud.

While it may be somewhat unsettling to parents to think about their teenager sporting a credit card, this powerful plastic can be an invaluable training method for sound financial management. Here are some tips for parenting with plastic:

Training early

Credit cards are merely tools for managing money. The key to making your teenager understand how to use them is to instill sound financial habits early in your child's life. Start by exposing her in middle school to a regular allowance. Give her a set amount of money, and teach her how to budget her funds. If her allowance runs out, don't give her more until the next regularly scheduled deposit. Reward her for saving. It's important to instill spending discipline at an early age.

High school test drive

As your teenager gets old enough to get behind the wheel of a car, let her test-drive her own plastic. Start with the debt world's two equivalents of training wheels-a debit card, and a credit card with a low credit limit. The debit card deducts funds immediately from your child's bank account, so that there's no credit limit to abuse. However, if you want her to get a taste of how tempting a line of credit can be to tap, you could give her a card with a low maximum limit.

College education

When your teen hits her college years, she's ready for her own card. By now, you've instilled financial discipline, as well as some budgeting and money management skills. This is a good time to explain to her how carrying a balance on a credit card can result in serious long-term expenses. You'll also want to show her how credit scoring works, especially how late payments on credit cards can seriously impede her ability to get a car loan or a home mortgage further down the road.

There's no better way for a child to learn a lesson than through experience. The fear of every parent is that his child will suffer long-term harm if she gets a credit card in college and uses it irresponsibly. To ensure that your child won't fall when she steps out of the financial nest, start her training at an early age. The sooner that she understands the consequences of irresponsible financial management, the less likely she'll fall victim to the perils of plastic.

Published on May 10, 2007