When I got my first bank account at 16, I was lucky enough to have my father as my financial advisor. Following his lead, I was able to build and maintain a solid savings account that was in the $10,000 range, untouched. When I turned 18 I treated myself to a computer and other things that I felt I deserved in my two years of savings. Little did I know, this would help me to keep and maintain an account for the rest of my life.
The cool thing about my dad is I can go to him for basically anything, within reason of course. If my account ever dipped into the low hundreds, I know that I can easily speak to him openly on the topic of debt advice, loans, credit cards and just random questions in regards to my current accounts without him flipping out about it. I also know that based on his experience he’s a good source to go to for mortgages and even home insurance.
I was luck enough to have him around when the 100+ “You’ve been pre-approved” notices showed up for credit cards over the last 6 years. I think every credit card company available to my age/paycheck range had me in their database. I was smart enough not to take any of them. To this day, I still don’t have a major credit card other than the Master card logo that’s attached to my ATM card. I’ve lived on the theory that you can’t spend what you don’t have. I’ve heard the horror stories about young adults almost having to claim bankruptcy because their debts have just kept building up to uncontrollable levels. I know that I will make it a point to never be like that.
Even if I had $20,000 sitting in the bank, I don’t think I’d ever get myself a credit card. What’s the point? You can buy things as you need them with the money you have or you can pay the unreasonably high 20% interest rates for every dollar you spend. A friend of mine bought a new TV for like $1,000 on their credit card, now it’s costing them $1,200. She had the money in bank to buy it in one shot, why she chose the credit card route is beyond me. Spending what you don’t have is never going to be a smart idea, no matter how financially advanced you are.
Stick to what you have, 90% of purchases made throughout the day are on credit. Buy now…pay later. This is what young teens think when they get their first card. They never realize how much everything builds up over time. It’s more effort than it’s worth, something to think about the next time you go to pay for an item you don’t really need…with money you don’t really have.
Personally, I know I have a credit card because I find it more convenient. I pay off the entire balance at the end of the month, so I’ve never suffered the whopping interest rates. I always make sure to not spend more than I have, and my credit limit is only $1000 to begin with. If I really got into trouble and had to charge something major, it’s still nothing that I can’t pay off. That, and my bank dings me for every debit transaction, and I don’t always feel safe carrying tons of cash around. You don’t know where it goes. I like that I can see my credit statement and know exactly where I’m spending my money.
I’m like you, I’ve had a savings account for years, and my dad instilled into me an ethic of saving. Credit cards aren’t all bad! =)