Richmond Hill students offer teens personal financial advice

1. The notion that all debt is bad Below, Hosseini shows the five most misunderstood aspects of personal finance:

2. The belief that credit cards should be avoided

There are good and bad debts. It is important to be able to distinguish between the two. The question you can ask yourself when you go into debt is whether it will make you more money in the long run and make up for the interest you paid. For example, many real estate investors use mortgages to buy homes even though they can afford the full price in advance because they would rather invest their money elsewhere where it can earn a higher return.

Credit cards can sometimes get a bad reputation because when used irresponsibly, they can cause people to go into thousands of dollars of debt that take years to pay off. However, learning to use a credit card responsibly by paying your balance on time and not making unnecessary purchases is essential to building a good credit score, which can be crucial when applying for a loan like a mortgage.

3. Chasing money as opposed to financial goals

People often approach money with the mentality that “the more the better.” However, personal finance is really centered around being able to identify your own financial goals and build a lifestyle around it, as opposed to chasing a static income or savings. It is important to consider what you want to achieve financially and how you can create an individualized plan to achieve these goals.

4. Take out loans because they are available

5. Thinking you are too young or do not have enough money to start

When you borrow money to finance higher education or the purchase of the home, you may be offered a lot of money in loans, which can then become a huge burden when it comes time to pay it off. So it is important to remember that even if the money is available, you need to be careful about the amount you borrow and consider how you plan to pay the loans off.

Many teens / college students assume that because they are still young or do not have thousands of dollars to invest, personal finances do not worry them. But it is the small actions that add up to be incredibly valuable over time. By learning about personal finance in high school, teens can be much more aware of the decisions they make when they turn 18 and / or go to college. By starting to save and invest very small amounts as early as possible, they can take very big steps towards building their wealth. These small actions will have greater significance than single large actions once in a while.

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