IT IS never too early to pick up the right money habits. Easy credit and other inducements raise the risk that the next generation will be saddled with debt and extravagant spending habits.
The country sales manager for Ipac financial planning, Mr Bill Castellas, says: 'Debt, like savings, plays a crucial role in our lives. It is not a bad thing when managed well.
'But managed poorly, it can result in a poor credit rating that will be used to assess your eligibility to obtain a car loan or mortgage. Establishing the right money behaviour early will make life so much easier in the future.'
Here are some tips to instil responsible habits:
Pay the full balance every month
Do not fall into the trap of paying the minimum payment only. In the case of the Citi Clear card, the cost of rolling over the outstanding balance is interest that is charged at a whopping 28 per cent annual rate. The interest costs will add up over time.
Charge only what you can afford to repay
Exercise good discipline in how you use your card. Make that purchase only if you know there will be sufficient funds to clear your bill at the end of the month.
Use credit cards only in emergencies
This is especially true for youth who still receive an allowance from their parents.
Make a record of all credit card purchases
This is so that you are not caught out when the monthly statement arrives.
Deposit all your ATM and credit card receipts into a jar so you have a visual record of your spending.
Pay bills on time
This will help build a good credit history. Late payments incur late fees.
