CARZ4GIRLZ: 5 Basic Financial Mistakes Most Youth Make When Buying a Car
Do you know, right now, this very minute, whether or not your parents lease or own their cars – and if there is a car payment involved? And how much a month is that payment, as well as how many more payments do they have to make before it’s paid off?
Don’t know? Well, you're not alone.
Math, English -- And Personal Finance 101 in High School?
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 affairs. Duh!
In response, economics is once again being taught in a lot more in high schools than it was 25 years ago, and that’s a good thing. I’ll bet your grandparents had economics in their high school days and understood budgets and the vale of a dollar.
Honk if You Love Economy Cars
Another great fact (and surprising – to me at least, I thought only my friends were so smart) about the young when it comes to their cars and finances is that the car tastes of teens and twenty-somethings are not elaborate. In fact, they are downright frugal and smart. (See, we are not so bad after all).
A recent study conducted by TRU, an International Research Company, found that the Toyota Camry, Honda Civic, and the Ford Focus were in our Top Ten vehicle choices. And the Civic and Camry struck a strong chord in the same place with the twenty-somethings.
It appears we understand vehicles are depreciating assets only worth their weight in getting you somewhere and back, safely. (I know it’s hard to believe that we “Milleneals” are that practical)
Low Scores in the Basic Finances Arena However, the JumpStart Coalition reported that high school seniors answered only 48.3 percent of the questions put forth in its National Financial Literacy Challenge correctly, which puts teens financial I.Q. down from 52.4 percent last year. (Do you think that kids are skipping the boring economics classes or what?)
So even when you've made the correct economical choice of a car, the buying and ownership process has only just begun.
Avoid these 5 Basic Financial Mistakes Most Youth Make When Buying a Car:
Trusting the wrong sources about the car in question. It's a given the manufactures are going to hype up their products with alluring descriptions and advertisements especially on their web site …so go there first to get their take on the car of your dreams and then get real, visit The Auto Channel for expert opinions and the ALL THE FACTS, and then visit some car blogs where real-life drivers post their personnel woes and praises of the cars and trucks they own and drive.
Being financially illiterate leaves you at a complete disadvantage. Find out the car of your dream’s Invoice price. Dealer fees, transportation charges, extended warranties and any "extra" costs – costs that you are not legally obligated to and may be completely avoided.
Not calculating the real cost of car ownership. Depreciation, interest rates on car loans, insurance, maintenance fees, monthly gas – all items that balloon your real cost of car ownership. To better prepare, check out the Total Cost of Ownership tool right here on The Auto Channel.
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.
Not driving smart enough. Driving within speed limits can actually save gas, yes save gas…and In the case of an accident or driving offence, aside from the unexpected costs, your insurance rates can JUMP UP. And your relationships and possible ownership of the car are also jeopardized.
The fastest way to become another dumb adult is to get trapped in these car financial mistakes. Plan well!
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More to come, I promise.