Question: My finances have been hit pretty hard with all the stock market activity lately and my wife and I are cutting back our spending. Meanwhile, we gave our 16-year-old daughter a copy of our credit card when she started driving (in case of any road emergencies).
A few weeks ago, my daughter decided to go on a shopping spree with it and when I got the $800 bill, I hit the roof. I would have been angry no matter what, but the pressure on our finances lately certainly didn't help.
It's too late to return the stuff, so I told her she was going to have to get a part-time job after school to pay it off herself. Which she hasn't done. And now I'm getting icy looks at the dinner table and am invisible to her otherwise.
My wife agrees with me but also thinks I'm being too hard on her. I really do think my daughter should take some responsibility here. I have to admit, though, I'm tired of her being mad at me. Do I stand my ground or give her a get-out-of-jail card on this one?
Answer: Teenagers and credit cards: They go together like gasoline and a lit match. Or, as Laurie Campbell, executive director of Credit Canada in Toronto puts it, "Handing over your credit card to your teenage daughter is like handing her a loaded gun."
Okay, maybe we exaggerate, but not by much. I spoke with Ms. Campbell because the not-for-profit charity that she runs exists for the purpose of counselling and educating the young and reckless in matters of money and debt, something your daughter obviously needs. In fact, based on the extent to which your daughter splurged - which, incidentally, in most families would have meant temporary imprisonment or military school - I wonder whether you've ever talked to her about money.
"There's a real problem out there with teens and financial literacy," says Ms. Campbell, "which is that they don't have any." She points out that it's not taught in school and parents rarely pick up the slack. "It's assumed that every single person has to understand the English language to get by, but you also can not get by without understanding finances."
Ms. Campbell believes that even before they become teens, kids should be made aware of their family's finances. "Teach them when they're young," she says. "People hide their mortgages from their kids, hide their debts. Kids are so shielded that when they get out into the real world, they can't cope." Now, I don't think this means you should come home every day and gripe to your one-year-old about the overtime you worked to pay for her diapers, but just bring money into the conversation every now and then. The economic downturn is the perfect excuse to do this.
But there's also something going on here that has nothing to do with money, which is the catastrophe that occurs between fathers and daughters known as teenage-hood. Your case sounds relatively mild, but it's the same story: Your little girl is not so little any more - she is forming her own opinions, and you, her father, are making the inevitable descent from idol to idiot.
However independent she is - or thinks she is - you still have a few things to teach her, including how to be a financially responsible adult. Maybe your wife is right to say you reacted a little harshly at first - "hitting the roof." That might warrant an apology, but you can't let her behaviour pass without any repercussion.
I normally don't like to see kids working during the school year if it's avoidable, but a few hours of work after school or on the weekend isn't going to hurt her. If she's too busy with extracurricular activities - and I don't mean shopping - she could pay you back by doing chores around the house. Put a monetary value on some household jobs and she can even choose how she wants to earn it. Maybe she'll realize she has a fondness for vacuuming?
The icy stares will continue, but consider them the short term cost for a long term investment. Beneath all that frost, she knows you're doing the right thing and will thank you for it later when she's a debt-free adult.
You'll also be thanking yourself. "This time it's $800, next time it could be more," says Ms. Campbell as a final warning. "They need to do something about this now, or pay the price later." She means that literally.
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