Money mistakes can start as early as childhood. Here are some ways to help your kids and teens avoid making them.Your teen is likely starting to feel like an adult now, and suddenly they have big dreams and opinions about what they want to achieve. You may wonder how to help your teen manage their finances to have a financially secure future when they leave the family.
Old habits die hard, and it applies to everything from money management to diet and exercise. Teenagers with terrible money habits, such as not paying their bills on time and blowing their allowance, may find it harder to save for the future and maintain a solid financial position.
Your role as a parent can be significant in helping your teen develop the necessary skills to manage their finances. There are no guarantees, but some of the biggest financial mistakes teens and young adults make are preventable with proper planning and education. Here are some money management tips to help them avoid costly mistakes.
- Not Learning How To Budget
It’s important to teach your children about budgeting right away so that they can start handling their finances properly. This will allow them to feel comfortable and confident when making decisions independently.
- Not Saving
One of the essential factors that young people should consider when it comes to managing their finances is saving. This is because, in adulthood, they must have sufficient money to cover unexpected expenses such as car repairs and retirement. Having a steady supply of money can help them avoid making financial mistakes. One way to practice this skill is by saving for a sure purchase, such as a new computer.
- Buying Too Much They Don’t Need
It can be challenging for teens to say no to the endless requests from their social media friends and advertisers. However, always succumbing to consumer pressure is a money-making mistake that can quickly destroy their savings. Sometimes, the needs and wants of children can feel similar. For instance, you may have heard your child say, “But I need it,” when they ask for a new toy or gadget. Understanding the difference between wants and needs can help your child make their own decisions.
- Getting A Credit Card Too Soon
In Canada, teens are generally only allowed to get a credit card if they’re at least 18 years old in their province. However, they can still be issued a card at a younger age. This means their credit history could be affected if they have a high balance or late payments.Although it’s generally a good idea to start building credit early, it’s also essential to consider the various implications of having a credit card when managing your finances. If a teen has no source of income and is prone to making only minimum payments, they could end up paying more for their purchases and getting into a financial mess.
- Too Much Of An Expensive Car Loan
A new car may seem like the ideal purchase for a teenager, but it could also be a burden if they don’t have the money to pay it off. Unless they have saved a lot of money or you’re willing to finance the car payments, they could owe a tremendous amount. Getting around efficiently can also reduce your vehicle’s costs. If you live in a region with plenty of bike and public transit options, consider leasing or buying a used car that won’t require a huge loan.