As a parent, you’ll face so many massive challenges. It’s a steep learning curve and often, you just have to try and pick it up as you go along. One of the biggest surprises that parents often get is how difficult it is to manage money when you’ve got kids. With all of those extra expenses, you need a completely different set of money management skills than you did when you weren’t a parent. If you’re going to become a parent soon or you’re already a parent but you haven’t quite got a handle on your finances yet, read this list of common money mistakes that parents make and avoid them at all costs.
Neglecting Your Credit Score
Your credit score gives an indication of how sensible you are with your money. As a parent, there’s a good chance you’ve borrowed money at some point to cover all of your expenses. That’s perfectly normal but if you haven’t made all of your repayments on time, you’ll have a bad credit score. You might neglect it because it isn’t causing you any problems right now but it’s going to come back to bite you. If you ever want to move house or get financing for a new car, lenders will look to your credit score. If it’s bad, you might not be able to borrow the money and even if you can, you’ll be paying a huge interest rate. That’s why you need to sort your credit score now, the longer you leave it the worse it’ll get. Sometimes, there are mistakes on your credit report that you can challenge (you can learn how to dispute credit here) and get removed. If you do that, you might be able to improve your score a little. Beyond that, you need to cut back on spending and clear all of your debts. Once you’ve paid all of them off, you should take out another credit card and make small purchases, then the balance right away. This will help you to build your credit card slowly.
Saying Yes Too Often
When you take the kids shopping with you, they’ll probably be hassling you to buy all sorts of stuff. Parents often just give in and say yes to keep them quiet while they finish the rest of the shopping. It doesn’t seem like you’re wasting that much money but if you do it on a regular basis, it’ll add up. It also teaches your kids the wrong lessons about money and encourages reckless spending in later life. You can still treat them sometimes but don’t say yes every single time.
Avoiding Conversations About Money
As a kid, my parents would never tell me how much money they earned or how much was in the bank. For some reason, we have this idea that kids need to be older before we’ll talk to them about money but that’s not a sensible idea. The earlier you start talking to them about it, the better their understanding will be. You’ll find that they’re far more responsible with their money in later life if they’re having conversations about it from an early age.
Avoid these money mistakes and your family will have more money and the kids will be better equipped to handle their own money when they’re old enough.
*This is a contributed post