Most of us don’t think about credit until we need it. Instead, we stumble into the world of credit scores and credit history when applying for our first car loan, renting that first apartment, or getting our first credit card. By that time, whether we realize it or not, we have already formed financial habits. That’s why most experts suggest that kids and teens learn to build good credit early—long before potential lenders come knocking. So, when should parents start preparing their kids for a future with smart credit habits? The answer: sooner than you might think.
Money Habits Start Young
While there’s no single agreed-upon age when financial habits are fully formed, research shows that kids begin developing money attitudes as early as preschool. Here are a few of the key players in the argument:
- A widely cited 2013 study from the University of Cabridge suggests that money habits are set by age seven.
- A 2017 University of Michigan study argues that children as young as five have distinct emotional reactions to spending and saving money.
- A 2019 Brookings Institution study found that financial literacy programs in schools have a measurable impact on students’ future financial success.
- A 2022 T. Rowe Price Parents, Kids, & Money Survey showed that children who discuss money with their parents tend to develop stronger financial habits, while kids who don’t struggle with money management later in life.
Collectively, these studies and surveys suggest that between the ages of 3 and 7, many of our foundational financial behaviors—like saving, spending, and understanding value—are already taking shape. Ultimately, those foundational behaviors and emotional reactions to money translate into real-life spending behaviors.
Understanding Credit Basics at Any Age
Teaching kids about credit is a little more complicated. After all, credit isn’t just about borrowing money; it’s about responsibility, trust, and long-term financial health. Learning about credit means learning about interest rates, credit scores, and the impact of borrowing decisions. It’s a challenging concept to explain (especially if you are not an expert yourself), but it’s the kind of knowledge that can set kids up for financial success in adulthood. Start by introducing the concept of money and slowly demonstrate smart spending habits. Eventually, they can start learning about how credit works.
Age-Appropriate Steps to Building Credit Awareness
Introduce Basic Money Concepts: Ages 5-10
- Teach kids the difference between needs and wants.
- Give them a small allowance and encourage saving for future purchases.
- Introduce the concept of borrowing and paying back (e.g., lending them a dollar for candy and having them repay it from their allowance).
Build Responsible Spending Habits: Ages 11-14
- Open a Youth Savings Account or get them a Greenlight debit card that will help them learn how to track balances, spend wisely, and save for big purchases.
- Discuss how debit and credit cards work, emphasizing that they are not “free money.” Help them understand what happens when you overspend.
- Start talking about credit scores in simple terms, explaining how good credit helps with major life purchases.
Introduce Real Credit Concepts: Ages 15-18
- If your teen uses their Greenlight debit card responsibly, help them learn credit responsibility with the Maps Youth Platinum Mastercard. Youth Program members (16 or older) can open a credit card with a limited line of credit when a parent or legal guardian co-signs on the account.
- Or, consider adding your teen as an authorized user on your credit card to help them start building a credit history (while monitoring their spending).
- Even if you don’t hand them their own card, teach them about credit reports, interest rates, and the impact of debt.
18 and Beyond
By the time your teen turns 18, they can apply for their own credit cards. However, that doesn’t mean they should rush into debt. Encourage them to start with a secured credit card (bonus: they can save up for that security deposit in advance). Teach them how to use that card only for small, manageable purchases and pay the balance in full. Every quarter (or more frequently), review their credit report to monitor changes in their financial standing. Do this together, and discuss what’s happening. Eventually, your fledgling adult will learn how small actions can have a significant impact—and they’ll learn to track the changes themselves in the future.
If there’s one takeaway from all this, it’s that there is no “too young” when it comes to learning about credit. The earlier children develop financial awareness, the better prepared they’ll be for the real world. By teaching smart credit habits early, parents can set their kids up for financial success and ensure they make informed, responsible decisions about borrowing and credit in the future.
Want more tips on teaching kids money management skills?
- Discover some hands-on ideas that will help kids save, spend, and earn at any age.
- Learn the hows and whys of giving your child an allowance.
- Find out how to answer all those challenging questions kids ask about money.