4 Money Management Mistakes Teens Often Make


As your adolescent grows into adulthood, they will be faced with financial responsibilities they must tackle on their own. Prepare your child to become a self-sufficient, money manager — give them opportunities to practice organizing and handling finances while they’re still under your roof. Keep in mind that your teen is still building the skills to make well-reasoned and non-impulsive decisions. There are some money mistakes they are likely to make, which you should keep an eye out for and correct when they’re noticed. Here are four money-management mistakes teens commonly make:

Irresponsible Budgeting

Teenagers often pursue instant gratification, rather than long term investment, when it comes to how they spend their time, energy and money. Your teen probably directs their money toward shopping for frivolous items, rather than using their funds for necessities. Teach your teen about the financial obligations they must keep in mind when they assess how to spend their money. Sit down with your teen and create a list of anticipated monthly expenses and make note of which expenses are unavoidable and required, like a cell phone bill, auto insurance and gasoline. Once you have the list organized, use a budgeting app that will track the money your teen spends and saves. Use a user-friendly app, like Mint, which can be accessed on your teen’s smartphone, tablet or laptop. The app can notify your teen when they overspend or deviate from their budget plan, as well as give a reminder of upcoming bills.

Mishandling Credit

One important aspect of budgeting is how to handle your credit. Your teen can dig themselves in a financial hole if they don’t understand the ramifications of bad credit. Your teen may mismanage their credit through maxing out their card, using their card on unsecure websites and avoiding or forgetting credit card payments. Talk with your teen about the consequences of mismanaging their credit; mention that bad credit will limit their opportunities to take out loans, have low interest rates and be approved for leasing an apartment. If you need educational reinforcements that will help your teen understand the complexities of credit, use Clearpoint’s counseling services. The free counseling service will teach your teen how to assess their current credit, understand their FICO score and develop a credit action plan.

Lacking Emergency Funds

While your teen’s credit card could be used in emergencies, they should also have a savings fund that serves as a cushion for tough times. If your teen doesn’t have any emergency money in their bank account, they will likely use a large chunk of their credit that they can’t quickly pay back. Teach your teen that they should save money for situations beyond big-purchase items, like car troubles, healthcare and unforeseen educational expenses. Accompany your teen to their bank, so they may talk with an advisor about how they want to distribute their income into both their checking and savings accounts. The advisor can help your teen take action and create a savings system that will serve as emergency funds.

Identity Theft Susceptibility

Your teen will likely use their credit and debit cards wherever they go, for whatever they want. Teens will frequently use their cards on conspicuous e-commerce sites and are more likely to be lured into a scam. Talk with your teen about the serious consequences of identity theft and how they can protect their money and themselves from scammers. Sign your teen up for an identity protection solution like Lifelock. Lifelock provides services that will scan for identity threats, alert you of suspicious threats, restore stolen identity and reimburse stolen funds.


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