The ‘teen’ age is where individuals start to develop their personalities. It is also the time where most people get the first taste of freedom and responsibility. Unfortunately, it is even the time where most of us make mistakes. Looking back, I wish that someone would have guided me about numerous aspects, especially the financial aspect.
During the teen years, teenagers buy things they do not necessarily need. Likewise, they have zero to little understanding of terms like credit score, financial system, savings, insurance, or automobile insurance. However, as soon as we move out from the parent’s house, or enter the professional world, reality starts to sink in.
We wish that we had saved money, taken financial courses, planned carefully for the future, invested in savings, our taken out insurance. Well, the past is the past. We are now way past the teenage years. But if a teenager or parent is reading this article, we suggest that you pay extra attention. Why?
Well, we are about to discuss the most common mistakes teenagers make and their solutions. As a parent, we advise you to read it and ask your children to go through it. This is more than just a random article; it is a piece of professional advice coming from someone who has carefully studied successful people. Let’s start.
Most teenagers rely on credit cards for making purchases. The parents are the ones responsible for paying the bills. However, what the youngsters do not understand is that the credit score is the very foundation of the global financial system. One wrong decision can ruin their credit score, which can lead to repercussions.
For example, if the teenager wishes to purchase a car, they must take out car insurance. For youngsters, the insurance premium is considerably high. Now, car insurance companies in the UAE also use the credit score to determine the premium. In case of a poor credit score, the premium will go higher. In some cases, the payments take a significant chunk out of the earnings. Therefore, always maintain a good credit score by paying dues in time.
Failure To Set A Budget
As children, our parents fulfil all our needs and wishes. This gives the impression that the family has access to unlimited resources. However, that is not the case. Therefore, teenagers must be taught to develop a budget and stick to it. It will go a long way in helping them manage their finances.
For instance, a youngster decides to buy a car. They calculate that the maximum budget that they can allocate for maintenance and insurance is AED 250. This will get the teenager to think about how to ensure that the repair and insurance costs do not exceed the budget. In turn, this will improve his research skills.
For instance, the teenager might search ‘cheap car insurance in Dubai’ or ‘vehicle insurance in UAE under AED 220’. These searches can help teenagers get a better car insurance deal and manage their finances more effectively.
Another common mistake made by youngsters is that they fail to invest in savings. Instruct your child to allocate a fixed percentage of his earnings to savings. It can be 10% or 20%. The vital thing here is to impart a sense of saving money that can be used for emergency purposes or early retirement.
This concludes our article today. Let us know what you think about it in the comments section below. Remember, always keep an eye on your credit score, stick to a budget, and save money for a rainy day. Otherwise, you will end up working your entire life.
M Junaid Lead Writer, Content Marketer at PitStopArabia, A writer by day and reader by night.