Why is an 18th birthday so important

Finally 18: Seven Things That Are Changing In Finances

Wednesday, March 6th, 2019

Young people are eagerly awaiting their coming of age. This brings with it new rights, but also some obligations.

Finally drive a car, stay out as long as you want - the 18 on the birthday cake is a very special number for many. Because this birthday brings with it some freedom. At the same time, coming of age comes with a lot of responsibility. A lot is changing, especially financially:


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1. Rent and buy - no problem

The number 18 means, above all, independence: when you are of legal age, you have full legal capacity. That means you can conclude all kinds of contracts - be it the rental agreement for the first room in a shared apartment or the purchase of a car. It is important to think carefully about the conclusion of a contract, because as an adult you bear the risk of your own actions. Young people are also often required to provide a guarantee for large contracts. With this, sellers or landlords want to make sure that someone will step in financially in an emergency.

2. There is still child benefit

As long as you are still in training, parents will continue to receive child benefit. It does not matter whether you are still going to school, learning a trade, completing a degree or doing a voluntary social year. The payment continues until the end of the 25th year of life or until the end of the training.

3. Open accounts

From the age of 18, you can do all financial transactions yourself, such as opening your own account or taking out loans. Many already have savings accounts or savings accounts that have been created by parents, grandparents or godparents and are already in their own name. Here the power of attorney of those who opened the account expires, so that the adult is the only one with access to the money. In most cases, it is then necessary to identify yourself as the account holder. The bank advisor will help you with the question of which steps are necessary in each individual case.

4. The tax liability takes effect

If you have your own income, you also have to pay taxes for it. One specialty is that you are responsible for taxing your own income from the year you turn 18. Even if you only come of age in December. However, the salary is often still low, especially if you are completing an apprenticeship. Many students also earn something with a student job. With annual tax allowances such as the basic allowance of 9,168 euros and lump sums for advertising costs and special expenses of 1,036 euros, the legislature takes into account that income is only taxed above a certain amount. The tax offices can provide information in individual cases if you have any questions. Tip for everyone who earns more and therefore pays taxes: It is often worth filing a tax return in order to get back overpaid taxes.

5. Co-insured with parents

If you are still in training or in a part-time job with low earnings, you do not have to insure yourself and can continue to be insured with your parents with certain insurances. This applies above all to health, liability and legal protection insurance. As long as you are not gainfully employed, for example because you are still going to school, the time is extended up to the age of 23. If you are completing an apprenticeship or a degree, you can stay with family insurance up to the age of 25.

6. Turn money into a future

If you start saving for the future early on, you can save a nice sum over a longer period of time with as little as 25 euros a month. In this way, the dreams you have when you are 18 may actually become reality in the future.

7. Retirement planning

Retirement provision seems a long way off when you are 18 years old. However, it is worthwhile to set aside some money now for later. The Riester pension is one way of providing for old age with small amounts. If you start to work before the age of 25, the state even gives you a one-time career starter bonus of 200 euros.

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