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5 Financial Mistakes Young People Make & How Parents Can Help

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We’ve all be there – spent too much money, avoided planning ahead, paying bills late, and generally avoiding the fact that as we grow up, bills begin to show up at the end of the month.  Here are 5 financial mistakes that young people make and how parents can help them avoid financial ruin!

What Budget? Most young adults get their paycheck, and head out to spend it on a fun Friday night, followed by a shopping trip at their favorite clothing store, only to wonder a week later why they can’t make their electric bill. Although budgeting may seem easy to a seasoned veteran, young people find it it hard to think ahead and hold on to that precious paper. They are, in a sense still young and impulsive, which can lead to serious financial ruin rather quickly.

Nickel and Dimes – That $4 Starbucks, that cute pair of fuzzy socks from Target, and those coffee filters needed for the next morning may seem like just a few dollars, but when you are picking up small items every.single.day it becomes a problem, and I think most young adults would be shocked to see how much they’re spending each month on “inexpensive” items. I was certainly guilty of this in my teens and early 20’s, and I think many of you can relate.

Plan what?  For most youngsters planning ahead isn’t exactly on the priority list.  Just like setting a budget, planning ahead for expenses, setting the money aside, and tracking when payments are due on a calendar are all ways that young adults can better financial decisions.

Charge Now – Pay Later? Brilliant! –  Um…not so much!  When my first credit card came in the mail at the ripe age of 18, I thought the idea was brilliant!  I could go buy whatever my heart desires and pay for it later?  SCORE!  Yea, not so exciting when the bill showed up at the end of the month and I had no money left to pay it.  Credit cards can be dangerous and helpful all in the same aspect, but young people can get in over their heads before they know it.

I HAVE to have that – I walk by a million things a day that I would like to have, however living within our means is an important lesson to learn, and one that many young adults don’t quite get yet.  Impulse buying and purchasing items that is outside of their means is a classic mistake made by many, and debt can build up rather quickly when their trying to keep up with what’s “in”.

So, how does your young adult avoid financial ruin?

First, start teaching your child from a very young age how money works.  Open a savings account for them, allow them to “earn” money, then deposit it into their own account every week.  Show them by your own actions that we can’t always have everything we want, and we must plan ahead for each purchase.

Second, educate yourself on smart financial planning.  There’s a number of great money saving articles located on online sites that focus on financial stability.  You can then, in turn, take the proper steps to teach your child how to manage their own finances as they grow older.

Lastly, remember it’s the example that you set that will ultimately carry over with them into adulthood.  If young adults see their parents acting responsibly with money, they’ll be sure to follow in your footsteps and make sound financial decisions that will stay with them for the rest of their life.

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