Children and money

Contracts

Your 13-year-old comes to you with a problem. They've signed up to buy a play station and some games on hire purchase, but now they can't keep up the repayments.

There's a common belief that children can't sign contracts or, if they do, that the contracts can't be enforced. In fact, children can sign contracts at any age. While the contract can't automatically be enforced against the child, if it was "fair and reasonable" - if, for example, your child is money savvy, the price was fair and there was no pressure - a court can require them to honour the deal.

If they have problems meeting the payments, the answer may be for you and your child to talk to the trader concerned and work out an affordable repayment schedule.

Another option is to ask the seller to take back the goods and cancel the agreement. But don't expect to get all the money back.

Credit cards

Say a young person has left home but you're worried because they're not good with money. To give them access to emergency cash, you want to give them a credit card with a $1000 or $2000 limit. But how do you prevent them from increasing the limit and being stuck with much bigger debts?

One option is to request joint operating authority for the account so you have some control. Obviously, the young person would have to agree.

Another option is for the young person to become an additional cardholder on your account. The advantage is that the young person can't raise the credit limit. However, if your own card has a high credit limit, take a second card for this.

See our report on Young people and the law for more information about children's rights, relating to money.