Beating Broke

Why You Should Let Your Teen Make Money Mistakes

December 2, 2019 By MelissaB 1 Comment

As parents, we want to help our children avoid the mistakes we made. This is especially true with money mistakes as they can set people back years from achieving their financial goals. (Sad to say, but some adults never achieve their financial goals.) However, there are several reasons why you should let your teen make money mistakes.

My Biggest Money Mistake

Teen Money Mistakes — Photo by Sincerely Media on Unsplash

I made so many money mistakes when I was young! Probably the costliest one was transferring to a university for the winter semester and choosing a dorm room. I called my future dorm roommate just to say “hi”, and she was so rude and gruff! Because I was shy and fearful about living with someone, I backed out of staying in the dorm, but I couldn’t get a refund on my money. I paid for that dorm for four months, and I never lived there!!

My mom never said anything; she let me make my own choice, and that decision was certainly one I learned from.

Watching My Son Make Money Mistakes

My son is now 15, and while he used to be a great saver, over the last few years, he’s become a spendthrift. If he has any money in his pocket, he will try to find a way to spend it, often on items he doesn’t even need.

I live in fear that he’ll move out, get a credit card, and rack up incredible debt, which will take years to pay off or cause him to file for bankruptcy.

Why You Should Let Your Teen Make Money Mistakes

As hard as it may be, as parents, sometimes the best thing we can do is step aside and let our teens live their lives as they inch closer to independence.

Better They Learn as Teens Rather Than Adults

Keep in mind, it’s better to let our teens make money mistakes now than as adults. My son is trying to save for a school-sponsored trip to visit some college campuses. However, he’s struggling with this goal because any time he makes some money, he feels compelled to spend it.

The worst-case scenario here is that he won’t be able to go on the trip. As an adult living on his own, he’ll face much more serious consequences if he can’t save his money. The worst-case scenario may be that he doesn’t make rent and is evicted. I’d much rather he miss the trip this year and be envious of those who did get to go. Hopefully that will motivate him in the future to save for large goals.

Experience Is the Best Teacher

While our toddlers soaked up every word we said and thought we were the experts, our teens our cynical and eager to break free from parental control. Simply put, they don’t like to listen to us. Sometimes as parents the best we can do is not say anything and let natural consequences take their course.

Think back to your own teenage years. Did you learn best from your parent lecturing you or the experience of making your own decisions and dealing with the consequences?

When your teen stumbles after a money mistake, don’t swoop in with an “I told you so!” No one appreciates that. Instead, be a sounding board and encourage them to make smarter decisions in the future.

Watching our teens make money mistakes isn’t easy, but as they crave more and more independence, letting them experience life, and fail sometimes, is exactly what they need.

5 Benefits and Drawbacks of Keeping a Change Jar

November 28, 2019 By MelissaB 3 Comments

Do you keep a change jar? My mom keeps all of her change and has been saving it for the last two years for a vacation. She is not alone as many people hoard their change as a way to save money, especially if they feel they’d otherwise be unable to. However, just as many (or more) argue that keeping change is a waste of time and space. Both sides have valid points; I find there are 5 benefits and drawbacks of keeping a change jar.

Benefits to Keeping a Change Jar

There are benefits to keeping a change jar, which is why so many people do so, even in this age of prevalent credit card usage.

Save for Something Special

5 Benefits and Drawbacks of Keeping a Change Jar — Photo by Deanna Ritchie on Unsplash

Have you ever seen the big five-gallon jugs that people use to collect their change? One man saved for 10 years, and when he cashed it in, he had over $3,000, which he used for a trip to Europe. Would he have saved that money without keeping his change? He says no. If you don’t have the discipline to save, keeping your change is a good, mindless way to save.

Cash Emergency Fund

Another woman saves her change for a rainy day. She and her husband had an expensive car repair that they hadn’t planned for, and they robbed all of their budget categories to pay in cash for the expense. That left her with no grocery money for her family of four for the month, so she raided her change jar. She had $224 in there, which she used to feed her family. It was still a tight month, but she didn’t go into debt, and her family didn’t go hungry.

Drawbacks to Keeping a Change Jar

Unfortunately, there are risks and expenses with saving this way.

Could Earn Interest

One of the major drawbacks to keeping all of your change in a jar for years is that you miss out on the interest you could be receiving. Take the man who had $3,000 in change. He could have invested his money as he saved and been earning interest. He would have made more money than he did just leaving it in his closet.

May Lose It All

An even bigger drawback is that you have the potential to lose all of the change. A friend of mine had about $120 in change she’d been saving, and, unfortunately, her house was robbed. All of that money was gone. Even if your house isn’t broken into, you could lose the money if you have a fire. Even teens have been known to dig into their parents’ change jar for a little extra money.

You May Pay a Fee

A select few banks still offer coin counting machines for free, but many won’t take coin rolls. If you have to rely on CoinStar, you’ll pay an 11.9% fee, so if you turn in $300 in change, you’ll pay $36 in processing fees. If you need to pay a fee this high, is it still worthwhile to save your change?

Saving change has been a fun way to save money, but as these 5 benefits and drawbacks of keeping a change jar demonstrate, it’s becoming increasingly costly. If you can have enough self-discipline to save the money on your own in a bank or invest it, that is the better way to save.

Do you save your change? What benefits and drawbacks do you see?

Things to Avoid When You’re Broke

November 25, 2019 By MelissaB Leave a Comment

Most of us have been there. You have three dollars in your checking account, and it’s five more days until payday. You may feel overwhelmed and not sure what to do. Unfortunately, many people in this circumstance feel that there is nothing to be done and, out of desperation, ignore their situation – continuing to live life as if their finances aren’t dire. However, all this does is make the situation worse. Instead, consider things to avoid when you’re broke so even if you’re not improving your situation, you’re not making it worse.

Things to Avoid When You’re Broke

Using Credit Cards

When you’re broke, credit cards can feel like a lifeline. For a while, at least until you reach your credit limit, you can continue to maintain your current lifestyle. But, this is a mistake! You’re broke! If you admit that and are frugal with your money, once your current financial hardship ends, you’ll be in a position to improve your finances. However, if you have to pay back thousands of dollars of debt, you’ll still be broke. Please don’t make this mistake.

Paying for Entertainment

Entertainment is expensive. Movie tickets cost $10 or more; a meal out costs $10 to $40, depending on where you dine. Netflix costs $13 a month. All of these expenses add up over 30 days. If you’re broke, don’t pay for your entertainment!

Go to the library and check out a movie for free. Attend a local free concert at the university. Invite friends over for board games.

Nobody says you can’t have fun when you’re broke, but find ways to be entertained that don’t cost any money.

Not Having a Budget

Burying your head in the sand is easy when you have no money. If you ignore the situation, it won’t exist, right? Wrong. Ideally, you should be budgeting every month, but this is even more important when you’re broke.

You have limited money, and you have to decide where that money should go. When you have a plan that you can follow, you’re much more likely to not overspend. Having a budget and following it is absolutely necessary when you’re broke so you don’t make your financial situation worse.

Hiding Your Situation

Don't Do These Things When You're Broke — Photo by Ali Tareq on Unsplash

Being broke is embarrassing, but being honest with your family and friends is the best way to handle the situation. If you’re not honest and you pretend that everything is fine, your friends may be offended when you repeatedly turn down invitations. If they know your situation, they may be more willing to find things you can do together without putting a financial strain on you.

Things to Remember When You’re Broke

Even though at the moment you may feel hopeless, remember that you’re likely not going to be broke forever. You will get a better job or have fewer expenses in the future (probably the former rather than the latter). Your financial situation will improve, but that improvement can come faster if you make sure to consider these things to avoid when you’re broke. Don’t make your future more difficult by making bad money decisions when money is tight!