Help your teen build healthy financial habits by introducing them to the concept of credit early on. This way, as adults, they’ll be in a better position to take advantage of all the perks that good credit allows. High school is a great time to start the conversation. Here are a few important topics and tactics to help them on their way.

Give Them Gradual Financial Responsibility

One of the reasons many young people make mistakes with credit is that they don’t see credit cards or loans as “real money.” Teach them that their plastic card represents actual money by introducing them to a debit card. It may seem odd to teach the basics of credit cards by starting with a debit card, but there’s a good reason.

By getting your child a debit card attached to their own checking account, they can see how their spending aligns with what they have in the bank. Fund the account with their job earnings, birthday and holiday gifts, or allowance. Having their own money will teach them to budget and get accustomed to drawing on those funds for purchases with their card.

From there, you can think about adding them as an Authorized User on your credit card. With no minimum age requirement, this approach keeps them accountable while allowing them to build and use credit.

If you think your child is ready for a credit card of their own, consider starting them out with a secured card. Secured cards function just like normal credit cards, but are connected to funds in a designated savings account, which sets the credit limit. This means there’s no chance of going into debt, making it an excellent tool to build healthy credit habits and history.

Teach Them the Risks and Rewards of Credit

As humans, we’re all tempted to splurge on things we don’t need. Help your teen recognize that credit cards should only be used to pay for things they can afford. To get the conversation started, use one of your own credit cards to explain concepts like annual fees, annual percentage rates and other costs of using a credit card. Encourage them to only use their credit card for essential items. That way, they’re more likely to be able to pay their balance back in full each month without incurring interest.

Most teens don’t realize how credit can affect them for years to come. Draw on your own experiences, whether good or bad, to demonstrate how credit affected you. Explain how poor credit can make getting a job, buying a car or financing a home more challenging.

Empower Them to Use Credit Wisely

As your child grows up and becomes independent, they’ll likely need to choose a credit card for themselves. Help them feel confident with their choice by showing them how to evaluate different credit card options. Focus on the importance of choosing a card with a low rate and the potential for rewards.

With this foundation, the concept of credit will feel comfortable for them. The strong credit history you’re helping them build will be beneficial when it comes time to apply for a loan, rent an apartment or even apply for a job.

Navy Federal wants to help your children prepare for the financial side of life. Check out MakingCents for more tips on developing smart money habits.