Bright Idea: Teach Young People to be Cautious Consumers

Photograph of a young woman grocery shopping.

Managing money can be one of the toughest skills for young people to learn as they transition to adulthood. And though homeless young people may often be guarded and distrustful of other people, they can still be naïve when it comes to managing money.

Youth workers can help young people understand and evaluate contracts and financial agreements and help them to spot and avoid scams. In this second part of our two-part series, we share experts’ tips on teaching young people about spending, saving and making good money choices. Here are four tips youth should follow to be cautious consumers:

1. Slow Down

Brent Neiser, who works with the National Endowment for Financial Education, says one of the most important things adults can help young people do is to slow down when it comes to making financial decisions.

When taking on a new expense—whether a new cell phone or a new apartment—teens should educate themselves about their options, he says. They should ask people about their experiences with certain institutions or processes. They should also shop around and compare answers from three different vendors to figure out who has the best deal.

Young people should also ask to take contracts home with them before they sign. That way, they can ask someone they trust to look the contracts over with them before they make any final decisions.

2. Read the Fine Print

When it comes to contracts, Neiser says, youth shouldn’t skim. They should read and understand the whole contract, looking not just at the top-line price but also at the terms of the agreement and costs for add-ons. Taxes, fees, added features on cell phones, utility costs for an apartment, obscure fees—these can all add up over the life of the contract.

Karen Chan, creator of All My Money, a hands-on curriculum emphasizing money management skills for people with limited financial resources, says, “Someone making $50,000 a year can afford to make a $50 mistake. But for someone who is struggling to make ends meet, even a $5 or $10 mistake can have big ramifications.”

3. Keep Long-term Goals in Mind

Young people also need to understand that a contract is a binding legal document, Neiser says. If young people don’t keep up their end of the agreement, their credit report can suffer for years. A bad credit rating can affect their ability to secure a job or apartment.

4. Be Wary

Even with sensible goals in mind, and with the best intentions, some young people can fall victim to identity theft, fraudulent emails, or websites that trick them into providing personal financial information. Teach youth to guard their social security numbers, account numbers and other personal information and never to send it by email, which isn’t secure.

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