Seven Money Mistakes Parents Make And How To Avoid Them

Parents have to make many decisions in their life and many of those involve money. Here are seven money mistakes that parents have been known to make: 

Delaying College Savings 

The cost of tuition at many colleges has continued to increase in the past few years. If parents don’t start saving for the education of their children early, it may force their children into having to finance a portion of their schooling with student loans. Of course, this is a burden that may have been avoided. 

Setting A Poor Financial Example 

Parents who live beyond their means are setting a bad example for their children. If parents don’t have a strong grasp on their finances, it’s much harder to teach their children to be financially responsible. 

Failing To Adequately Save For Retirement 

Unfortunately, some parents fail to contribute to their 401(k) retirement account. A few of them believe that they can start saving for retirement later in life. Typically, these individuals end up having to keep working so that they can buy food and keep the lights on during their retirement years. 

Splurging On Baby Stuff 

Some new parents get blinded by all of the baby gear that’s available. They may end up spending thousands of dollars on baby furniture, a new stroller and a bouncy seat. These costs can be eliminated if they choose to purchase baby gear off of sites such as Craigslist or borrow them from friends or family. 

No Budget 

Another money mistake that’s been made by parents is neglecting to make a budget. It’s too easy for individuals to purchase gifts for parties, sports equipment or new clothes when they don’t have a budget in place. That money may be better used by placing it into emergency savings or investing it in a retirement account. 

Spoiling Their Kids 

While it’s okay to be generous with kids, some parents go overboard and grant their every wish. Practicing delayed gratification with children is an important lesson that they must learn. Without this in their life, they may end up becoming big spenders who just purchase material goods so that they feel better. 

Bad Life Insurance Choices Parents have been known to make a couple of bad choices when they purchase life insurance. The first mistake that they make is not having enough insurance. If death occurs and they are underinsured, they may not have enough money to pay off debt, replace income or contribute to a college fund. Another mistake is thinking that purchasing insurance for a child will create an account that can be used to pay for college.

This blog was originally posted on http://VictorNotaro.com