Millennial Money: Managing credit cards when you grew up in a cash-only household

As you’re growing up, you learn about money from the people who raise you. Their lessons are based on their life experiences, which means there’s likely some bias built in.

That’s not necessarily a bad thing — you may have a savvy aunt who taught herself to manage her own money after a divorce, or a parent who cautioned you about debt because they struggled to pay down theirs. Hearing their stories can spare you from making financial mistakes. Even with all that history, though, you’re likely to make some financial decisions that will cause your relatives to wince.

Credit cards in particular can be a touchy subject in families where older generations avoid them out of the fear of costly debt, while younger generations embrace them for their rewards and convenience. Managing credit cards when it feels like you’re being “bad” can be difficult. Still, it’s totally OK to forge your own financial path based partially on family lore, and partially on your own goals and experiences.

APPROACH CREDIT CARDS WITH CARE

If you’re a first-generation credit card user, it’s essential to understand how they work — this includes learning about the types of credit cards available, how you’re billed and what happens if you get into debt. Beware of common credit card myths, like the idea that you should carry a small balance from month to month because it’s good for your credit score (there’s no need to pay interest for the sake of your credit score).

Start by using your first credit card for a basic expense or two each month, and be sure to pay the entire balance when it’s due. You can still use cash or a debit card for some expenses, and a credit card for others.

Gloria Garcia Cisneros, a certified financial planner in San Diego, recommends using technology to help you manage your card. Automate payments to avoid missing due dates, and take advantage of apps that track spending so you don’t have to do so manually in a spreadsheet, she says. Also, create the habit of checking your credit card statements each month to review your spending, and avoid saving your credit card information on merchant websites so you’re less tempted to make impulse purchases.

Credit cards are more than a way to spend — they can help you establish your credit history, provide extra protections on purchases and can earn rewards on your everyday spending. Used carefully, credit cards can be a tool that helps you move toward other financial goals.

Lea Landaverde, the founder of the Riqueza Collective, a bilingual financial education and media company, learned this at the age of 18, when she realized she first needed to build her credit history to qualify for a rental home. “I had to learn how a credit card could benefit me.”

EXAMINE THE ORIGINS OF YOUR CREDIT CARD BELIEFS

The messages you tell yourself about credit cards were installed in your mind long ago by loved ones who modeled certain behaviors. Credit card-related misconceptions and beliefs get passed down in families, especially when previous generations lived through difficult times. “When parents say debt is bad, they’re coming from a place of fear or trauma,” Landaverde says.

Garcia Cisneros was raised by her grandparents, who had widely different attitudes toward credit. “My grandpa was so against credit cards. He was like, ‘Cash under the mattress, cash is king,’” she says. Meanwhile, her grandmother not only used cards, but also maxed them out. “I didn’t know which one was right or wrong. When I got my first credit card, it was an emotional, impulse decision.”

Even if you’ve been financially independent for years, it’s hard to turn off that voice in your head that repeats relatives’ money beliefs that don’t match your current lifestyle. You can recognize why certain loved ones are credit card-averse, and use that family fear of debt as motivation to manage your credit cards thoughtfully.

SET BOUNDARIES WITH LOVED ONES

Beware of family members who see your credit card as their funding source because they don’t understand how their actions can affect your credit. Garcia Cisneros is willing to help her family financially, but she has learned to set limits after a relative used her card while on vacation. Now, she only provides money for emergencies in the form of a loan with interest.

CELEBRATE YOUR PROGRESS

As you become more confident with your credit card use, keep an eye on your credit score and pat yourself on the back when you see it go up. After all, you’re not just managing your credit card wisely, you’re creating an entirely new money mindset.

If you make a mistake or have to deal with an emergency expense and get into debt, it doesn’t have to derail your money goals forever. “You can start over,” Garcia Cisneros says. “You always have tomorrow.”

________________________________________

This column was provided to The Associated Press by the personal finance website NerdWallet. Sara Rathner is a writer at NerdWallet. Email: srathner@nerdwallet.com. Twitter: @SaraKRathner.