5 Money Mistakes Youth Make When Buying
When it comes to cars and finances, tastes with teens and twenty-somethings are not elaborate. In fact, they are downright frugal and smart. A recent study conducted by the international research company TRU found that the Toyota Camry, Honda Civic, and the Ford Focus were Top Ten vehicle choices for teens. Similarly, the Civic and Camry struck a strong chord in the same place with twenty-somethings.
Although young adults might know what's good for them on the car front, the dinnertime topic among teens and parents needs to take a turn to personal finances. The Jumpstart Coalition for Personal Financial Literacy determined that the average student who graduates from high school lacks basic skills in the management of personal financial matters and reported high school seniors correctly answered only 48.3 percent of the questions put forth in its National Financial Literacy Challenge. This puts teens financial I.Q. down from 52.4 percent last year.
So even if you are a young driver who has made the correct economical choice with a car, the buying and ownership process has only just begun.
Avoid these 5 Basic Financial Mistakes Most Youth Make When Buying a Car:
1. Trusting the wrong sources about the car in question. It's a given the manufactures are going to hype up their products with alluring advertisements. However, also be weary of ratings and studies. Instead, visit specialty car blogs and sites where real-life drivers post woes and praises on automobiles.
2. Being financially illiterate leaves you at a complete disadvantage. Especially when dealing with parents and salesmen. Find out the wholesale price. Dealer fees, transportation charges, extended warranties and any other "extra" costs – these are costs you are not legally obligated to and can be completely avoided.
3. Not calculating the real cost of car ownership. Depreciation, insurance, maintenance fees, gas, and interest rates on car loans – all items that balloon the real cost of car ownership.
4. Buying what you cannot afford. Live below your means, which is defined as being able to save even the smallest amount of money for an Emergency Fund for when – not if – something goes wrong with your car. Credit cards are to be avoided at all costs: They prey on the ignorance of the young, those who live above their means, and the unprepared.
5. Not driving smart enough. Driving within speed limits actually saves gas. In the case of an accident or driving offense, aside of unexpected costs, insurance rates can jump up. Relationships and possible ownership of the car are also jeopardized.
The fastest way to become an adult the hard way is get trapped in one of these car financial mistakes, so plan well – or plan to fail.
Ramser, Katrina. “5 Money Mistakes Youth Make When Buying.” VeHix. 15 September 2008. Web. 11 April 2011. <http://www.vehix.com/articles/top-10-list/5-money-mistakes-youth-make-when-buying/1>.
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