Today we are looking at the biggest money mistakes that millennials make. Try saying that 10x fast!
Millennials have a whole different take on life than their previous generation.
I’ll be honest, millennials get a bad rap.
How often have you heard that the millennial generation is entitled, materialistic and way too into social media.
I don’t believe that’s true though. I mean, I may be biased as I too am a millennial.
What I do know is that millennials have strong work ethics.
They want an opportunity to grow and flourish. They want to make a difference.
However, they also make quite a few money mistakes.
And it’s not really their fault, per se.
After all, how much financial advice is given to kids?
How much education do they get in school about money?
Regardless, there is a vast wealth of knowledge at our fingertips and no excuse not to educate ourselves with the internet.
That is how you ended up here after all.
So let’s get into the biggest money mistakes millennials make.
Waiting to Start Saving
Yes, a big screen T.V. feels like a standard of living. As does a fancy new car.
But the truth is, saving money right now is more important than any of the niceties you may think you need.
When you look at the numbers, the reality is startling.
Did you know that for every 7 years that you delay saving money, you cut your retirement in half!
For example, if your job offers to match your 401(k) contribute as much as you can to this generous offer.
Get into the habit os saving by contributing to your 401(k) as soon as you can!
Another thing millennials are terrible at, budgeting!
Just winging it, isn’t going to cut it.
In fact, if you were to log in to your bank account and start writing down every single thing you’ve bought in the last month, I bet you’d be shocked at how much your spending.
Creating a budget doesn’t seem like fun, but it is the very first step to finacial freedom.
It’s the base to a strong financial future.
After all, when you don’t stick to a budget, you let your emotions dictate your spending!
And we all know how dangerous that can get.
A budget will help keep you grounded and on track. It’ll help you save more and spend less on things you won’t even remember buying.
Ignoring the Importance of an Emergency Fund
One unforeseen mishap can totally derail all of your financial plans without an emergency fund.
For most millennials, this is usually in the form of an unexpected car repair or major medical bill.
Even with health insurance, a single ER trip can set you back a few thousand dollars. (In a good scenario!)
An emergency fund is a small savings created just to give you a bit of financial wiggle room.
I suggest saving at least $1500 and keeping it in a hard to reach account so that you aren’t tempted to use it.
This account should only before unexpected emergencies so that you aren’t forced to open a new credit card account or take out a loan in the event of an emergency.
Failing to Realize Retirement Is Just Around the Corner
Even when you are fresh out of college, you’ll be shocked at how fast the next few decades go by.
Don’t have the mindset that you have plenty of time before you should start worrying about what to do with money.
Be smart, and get a good financial plan started now.
Start saving and preparing for a bright future.
Not Establishing and Protecting Their Credit
Poor credit can be very expensive!
Your credit score can affect your interest rates on credit cards, car loans and mortgage rates.
Higher interest rates mean more money being spent on nothing, and less money going into your savings.
And savings = wealth.
A low credit score can even prevent you from getting a new job you’ve been eyeing.
And although avoiding getting credit cards may seem like your outsmarting the system, it can make it difficult to get loans for a house or car.
I speak from personal experience, as I waited until I was in my 30’s to establish my own credit.
When I asked for an estimate on how much I could receive for a home loan, I was told that I was a “ghost” and was “un-loanable.”
I was shocked and started building my credit then and there. I now have a fantastic score!
Not Calculating Student Loan Payments Ahead of Time
Student loans are so commonplace, that many grad students are shocked when they say their first payment.
It’s smart to calculate how much your degree can earn you salary-wise to make sure you can cover the costs when you graduate.
While that art history degree may seem like a good idea, being stuck with a $800 monthly payment may not be feasible.
Especially when your salary won’t cover the costs of your loan.
You might find that you need a less expensive school or a better paying career path.
Failing to Have Insurance
Unfortunately, millennials are the most likely to not have health insurance.
This can be a costly financial mistake.
With laws the way they are, your medical bill can put you into financial ruin.
It’s also smart to have renters insurance to cover your possession in the case of a disaster.
And if you’re married or have children, life insurance is a must!
Otherwise, you risk leaving your loved ones struggling in your absence.
Without insurance, your savings can be wiped out in an instant.
Accumulating Unnecessary Debt
Debt is a tricky siren trying to lure you to purchase all the things you couldn’t afford otherwise.
Unfortunately, it’s necessary for most of us to borrow money to buy a car or a house.
However, racking up debt to buy unnecessary stuff is a bit foolish.
Debt has a way of growing and snowballing out of control.
Do yourself a favor and void debt.
It’ll ultimately steal from your savings and future wealth.
There are tons of advantages millennials have.
Being young gives you an opportunity to make your future exciting and bright if you lay down the path to a good financial start.
Avoid these common money mistakes in your youth and make savings a priority!
I can guarantee you won’t regret doing it, but you will regret NOT doing it.