A lot of people are guilty of making financial mistakes, but teenagers are often guilty of making mistakes with money because they don’t know any better. While many adults are guilty of making similar financial mistakes, most adults quickly learn how to handle their money in a way that won’t hurt them further down the line. Listed below are some of the biggest financial mistakes teenagers can make with their money:
Underestimating the Cost of Items
Sometimes buying an item you’ve coveted for a while can be so exciting that you have tunnel vision when it comes to purchasing it. Many big-ticket items come with associated costs. For instance, buying a car means that you’ll also have to pay for car insurance, tires, and gas. Many teenagers don’t realize that there are additional costs for most items after the initial purchase is made.
Buying More Than You Need
Buying more than you need is a common problem for teenagers (and for a lot of adults, too). Sometimes having money means you want to buy as much as possible. So, you might buy ten new pieces of clothing when you don’t really need all those new clothes. Teenagers often let money burn a hole in their pockets.
Spending More Than You Have
Spending more than you have is one of the biggest financial problems for most people, but especially for teenagers. If they have a debit card, it’s easy for them to swipe it without realizing how much money there’s actually in their bank account. A lot of teenagers tend to avoid checking their account balances, which ends up leading to overdraft fees and negative balances.
Buying To Impress
Who hasn’t bought an expensive item in order to impress someone? Maybe they want to impress their friends with their spending habits or go out of their way to impress a boyfriend or girlfriend. Spending money to impress people rarely works out in the long run, but it’s an unfortunate financial habit that some teenagers make far too often.
Trying to Keep Up With Friends
If your friends have the latest gadgets or are always going out to eat, it’s easy to persuade yourself into spending the same amount of money so you own the same things or are able to do the same activities. Sometimes teenagers don’t realize that they may be in a different financial situation than their friends and may feel pressured to spend the same amount of money just to fit in.
Choosing Quantity Over Quality
A lot of teenagers also tend to buy quantity over quality, but sometimes the cheaper, multi-pack items end up being a poor purchase. For instance, let’s say a shoe store has a deal where each set of shoes is only $10, but the shoes are so poorly made that they need to be replaced every month. After a year, $120 will have been spent on those shoes. Instead, a well-made pair of shoes could be bought for $50 and could end up lasting for the entire year (or longer).
Not Saving Money
A lot of people are notoriously bad at saving money. Sometimes teenagers don’t realize that they should be saving money for the future. It’s easier to live in the present and not concern yourself with financial problems you may face down the road. But not saving money is one of the biggest financial mistakes that teenagers tend to make, and one they usually regret once they get older.
Budgeting is another big financial mistake most teenagers make. A lot of schools no longer teach students how to budget their money, so it’s the last thing on their mind when they see money in their bank account. Budgeting is something teenagers should learn in order to prevent overspending or spending frivolously. Budgeting is also just a good skill for anyone to learn when it comes to dealing with their finances.
Paying Avoidable Fees
Many teenagers also fall into the trap of paying avoidable fees, such as paying a fee for taking money out of an ATM, paying a fee for a late cell phone bill, or overdrawing their bank account. These habits are unfortunately ones that tend to stick, and can follow them into adulthood. Paying fees that could have otherwise been avoided is a huge financial mistake as well as a waste of money.
Spending Money Frivolously
Everyone has, at one time or another, spent money frivolously. Teenagers are prone to spending money frivolously because they don’t really have many other bills or necessities to pay for. However, this can also lead to the creation of poor spending habits, especially when they finally do have to start paying for more important things. Trying to curb frivolous spending habits it something everyone should consider, but teenagers definitely need to understand the problem before they really hurt their finances.
(Photo courtesy of Ed Yourdon)