Financial mistakes come in many forms. Sometimes they are mistakes in the realm of ethics, with individuals using their wealth in harmful ways which later cause them regret. Sometimes they are rooted in poor decision making, causing individuals to make choices that negatively affect there financial status. However, a rather underrepresented type of financial mistake are legal ones. In this article, we are going to be discussing an enormous financial mistake that is often the very first one that teens make.

Cosigning is the legal act of signing a loan or credit contract with a primary borrower, agreeing to take full responsibility for the debt if they fail to pay. In cosigning, individuals who have lower incomes or lower credit scores are able to gain access to loans despite their financial status. 

However, this is often one of the largest mistakes that people make, especially young individuals. This is because in cosigning, borrowers effectively are signifying that if they fail to meet payments, they will accept massive damages to their credit score. Furthermore, in the event that they default, they can be sued and held legally responsible. In essence, there is no partial liability.

So it’s important to recognize the fact with mistakes like these that financial literacy is not just about saving and investing. It is about making financial decisions in which you are fully informed and acting in accordance with your best interest.