How I Taught My Son About Credit
A mom invents a scoring system to let her son earn his playthings and learn about finances in the process.
Shortly after his sixth birthday, I brought my son, Nakoa, to the toy store, a $15 gift card clutched in his hot little hand. As always, we headed straight for the trucks and trains aisle. There, an endcap display stopped him in his tracks. A large, shiny construction-themed train set beckoned. He threw his arms around the box.
"This. THIS!" he crowed, rapturous.
I gently pointed out the price tag. "It's $69.95, baby. You have only $15." I helped him tuck it back on the shelf. "It would take a very long time to save up that much money."
"I could do it. I could save. I can be patient," he nodded, with a final hug of the box. "I want this."
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So began a flurry of money-scheming. Nakoa scoured the sofa and car for change. He brought me endless Diet Cokes, each five-cent deposit bringing him closer to his dream. He begged for chores until the lower three-and- a-half feet of our house sparkled. Weeks turned into months. Then, with an influx of cash from Grandma for a great report card, it was finally time.
Back at the store, he skipped ahead. As we rounded the aisle, I was gut-kicked by the sight of a Lego-filled endcap. The sets were gone. They were all gone. We flew through the stages of grief in a blur, as a store manager broke the news that the toy was not merely sold out, but discontinued. There was nothing to be done. The train had left the station.
Too devastated even to think about other toys, Nakoa piped up as we left, "I wish you could just buy things, then pay the money back later."
A credit system. It was so obvious. Why not teach him the concept early? As a kid, I'd never learned about finances. As a teen, I racked up huge credit-card debt before I'd ever heard of a credit score.
We sat at the kitchen table, and I explained how credit worked. I told him how, when I didn't have the cash to buy a car, the bank lent me money, because I was a safe risk.
Nakoa had been responsible with money and amassed decent savings through hard work. So, I said, he was ready to get a little credit, too. I'd start him at a score of 5, the highest in our new system. If he maintained a 4 or 5, and saw something important to him he couldn't afford, I would extend him credit and he could pay me back. If he continued to be responsible and repay me promptly, he would stay at 5. But if he started pestering me for things, his score would go down?as a real credit score would if you keep requesting higher spending limits.
Nakoa was thrilled: the objects of his desire were now within reach. He just had to remember that all his actions affected his score. If we had behavior issues, I might ping his rating down a half-point, I explained. If he owed me money but depleted his assets to buy a slushy, it might get lowered again. If he wanted something very pricey, he needed to push his score as high as he could before asking.
Nakoa is now 11 years old. Though trains were long ago replaced by the latest Nike soccer cleats, we still avoid arguments in shops. Sure, clerks sometimes raise an eyebrow when they overhear him say, "I can get this, right? My credit score is 4.5." But that's OK. I feel I've helped my son get a head start on money smarts.
Sascha and Nakoa Zuger live in upstate New York.