As a parent, you can teach your child all of the important lessons about credit that you've learned over the years. This can help him or her avoid credit pitfalls and enter adulthood well-positioned to take advantage of all of the perks that good credit allows—like a great house and a nice car.

Get your children started in high school. One of the reasons many young people make mistakes with credit is that they still don’t see it as “real money.” Be sure your children have their own checking account that includes a debit card—whether their earnings come from a job or an allowance. This will teach them to budget their money and get accustomed to using plastic for purchases. You could also check with your card issuer about adding them as an authorized user on your credit card. This keeps them accountable to you, while providing them an opportunity to actually use credit.

Stress the importance of being selective when choosing credit. Once they’re on their own, your children may get excited whenever they get credit offers—often not taking the time to read the fine print. Use one of your own credit offers to explain to them about annual fees, annual percentage rates and other costs of owning a card. Show them how to evaluate the benefits of credit cards so they choose credit options with good rewards and lower rates.

Explain good and bad uses for credit. As they move out on their own, young adults may be tempted to do what their friends do—going to concerts or taking an expensive trip, for example. Make sure your children understand that credit is not to be used to pay for things they can’t afford. Encourage them to only use credit for items they can pay back by the time their credit card bill arrives so they’re not wasting their available income on paying interest.

Have a talk about the consequences and rewards of credit management. Most young adults 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 has affected you. Explain how poor credit can make life more difficult when getting a job, buying a car or financing a home.

Be sure they aren’t afraid of credit. Young adults may be hesitant to dip into credit cards, not wanting to rack up debt by using them. Teach them to use the card wisely to avoid debt and begin to establish good credit. Later on, when they go to apply for loans, rent an apartment or even apply for a job, a strong credit history will be extremely helpful.

Give them a trial run. If you think your children are ready to start using a credit card responsibly, consider starting them out with a secured credit card. Secured cards function just like normal credit cards in their day-to-day life, but they use the funds in your savings account to establish the credit limit and carry no risk that they'll incur debt. It’s a good way to build credit history with little risk.

Navy Federal wants to help your child be prepared for the financial side of life. Check out Finances for Kids & for College for more tips on keeping your child on the road to success.

This article is intended to provide general information and shouldn’t be considered legal, tax or financial advice. It’s always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.