Two Financial Mistakes That Parents Make

Parents love their children and would love to do anything they can to help them. But many parents make a few financial mistakes in the name of love that actually hurt them and their children. Two of the most common financial mistakes that parents make are:

-Putting the children first

-Not having a safety net

If parents make these two mistakes then they usually end up doing more harm than good, even if they had good intentions in the beginning.

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Putting the children first

It may seem a bit strange to say that you should NOT put your children first when planning out your finances but this is exactly what you should do when making big decisions. Many parents get so caught up in saving to pay for a college education that they neglect their own retirement savings.

Remember, your children can always work and take out student loans (even though that is not the best option) to pay for college if they do not have a hefty fund saved up. There is nothing much you can do if you don’t have enough money saved up for your own retirement!

Not having a safety net

Another thing that many parents forget to work on while saving for their children’s futures is the level of insurance coverage. If children are dependent on you because they are under the age of 18 then if something happens to a parent the loss of income will be devastating.

It is important to have enough insurance to provide a level of income that will last long enough to cover the possible lost income. Be sure to cover the insurance you need before putting all of your money into a college fund because that insurance can help to cover those expenses in case of an emergency.

Author: Lulu

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1 Comment

  1. When I was younger, I have to admit, I didn’t understand why my parents weren’t paying for my tuition. According to the FAFSA, they should have paid X amount, but they told me they couldn’t. I didn’t understand at all, thinking if the FAFSA looked at their income and said they could pay X amount then they should be able to pay X amount. The problem was that I didn’t understand the huge discrepancy between what an income looks like on the FAFSA and how far an income can really stretch to pay for basic living expenses, let alone school! I ended up going to community college then transferring to a university when I was a little older than the average freshman and had a little life experience as well. What I understand now is that even if it seems like a person’s parents CAN pay for their tuition, that may not necessarily be the case. The parents very likely want their kid to go to college, but also want to make their mortgage payment or are already in too much debt, or whatever their personal case may be. I don’t really think it’s selfish, especially when they’re considering the well-being of the rest of the family. Ladytiqua, I would advise your friend to file the FAFSA and apply for as many scholarships as she can. Because she is a parent herself, she should be able to file as independent, which means she won’t have to include her parents’ income on her application.

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