If I’m the parent of a teenager, do I really want Justin Bieber to be delivering “life lessons” to my teen? It seems Justin still has a few life lessons of his own to figure out. And while I’m asking myself that question, I’d also have to wonder what life lesson is to be learned from getting a SpendSmart (huh?) credit card that enables me to put money on a card for my teenager. There seems to be so many things inherently wrong with this. Allow me to try to dissect them here.
Chief Executive of SpendSmart (renamed from BillMyParents) Michael R. McCroy says, “Parents have an easier time talking about drugs and alcohol with their kids than the family budget and financial literacy.” Two questions — does McCroy have any kids, and how does McCroy define financial literacy? While the name SpendSmart is less offensive than BillMyParents, the concept hasn’t changed. Parents are footing the bill for the teen credit card (and yes, parents can block websites and are alerted to purchases). Whatever happened to kids earning their own money for things that the card is supposed to cover like gas, food and clothes?
Justin's right about one thing —families should talk about money. But if we are to have a discussion about “financial literacy,” shouldn’t we talk about consumer debt and how easy it is to get into trouble with credit cards? And how credit cards are structured to make money?
If your teen gets used to using a card where the money just magically appears, might that not start what could become a very bad habit? The SpendSmart card will not teach the teen that minimum payments on a credit card mean that you are paying crazy interest rates, but it will teach them how easy and convenient it is to plop down a piece of plastic with no thought to who is really going to pay for the much-needed purchase.
SpendSmart is offering up Justin Bieber as a “real person” whose financial pearl of wisdom is “Whether you have $100 or $100 million, if you spend more than you have, you’ll go broke.” Thanks for that, Mother Goose Economics.
The fundamental element of “financial literacy” that SpendSmart is not addressing is the earning portion of the equation. There are two parts to any financial picture — what you earn and what you spend. SpendSmart is here to help teens with the spending part, without addressing the earning part. When teenagers get a job, earn and save money and establish a track-record of fiscal responsibility, then they should be allowed a debit card, to their own checking account (where they have to track every purchase) before they even entertain the notion of getting a real credit card.
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