Millennials live in an interesting time. They’re bombarded with student loan debt, competitive job markets, and a plethora of bills. Yet, they insist on splurging.
Whether it’s coffee, fancy cocktails or expensive meals, millennials blow money — even in the face of debt and low wages.
These people are also accustomed to consumerism. They spent their childhood with toy advertisements, memorable cartoon and movie characters, and the video game explosion.
Since consumerism was so prevalent in childhood, they’re bringing this spending to adulthood — which can wreak havoc on their finances.
To have better control over your budget, avoid these 10 common financial mistakes millennials make.
1. Lack of a Budget
Budgeting isn’t something you learn in school.
This process is learned over time. Plus, it’s based on trial and error.
Millennials are the culprit of the no-budgeting crisis. They are young and independent but use this mindset to justify mass spending.
If you wonder where your money is going, take a look at your bank statements and discover your financial mistakes. Find a way to limit your expenses and develop spending and saving goals.
2. Student Debt
The student debt crisis affects students nationwide. Approximately 1.3 million students graduate with debt.
Considering that most people graduate in their early 20’s, this means millennials will suffer from a lifetime of debt.
Unfortunately, taking a student loan is almost necessary. But there are ways to decrease your debt.
When you apply for a loan, only take the amount you’ll need. Or find programs where you can take out a loan per-semester.
3. Being Optimistic about Finances
There’s no better feeling than getting a job and finding out that you’ll receive a high wage or a large salary. You’ll be compelled to splurge, buy an expensive apartment or house, and treat yourself to a brand new car.
But these expenses add up. Even with an impressive salary, you can find yourself struggling.
If you do get a high-paying job, you should be as financially frugal as someone with a minimum wage job.
4. Bad Credit Decisions
You may have been approved for a credit card with a high spending limit. But this doesn’t mean you should spend that full amount on your credit card.
Here’s a good credit card tip: don’t spend more on your credit card then what’s in your bank account.
Do you have bills that need to be taken out of your checking account or debit card? Include those expenses in your credit card budget.
5. Not Setting Goals
Goals keep us working harder and striving for something better.
But millennials are notorious for a day-by-day mindset. Lack of goals contributes to overspending one day, maxing out your credit card the next, and having no money for bills.
Great examples of goals include saving a certain amount every month, paying your bills early, and only eating out on certain days of the week.
Your goals may develop into smart investing. This includes saving for a house, for an international trip, or for going back to college.
6. Not Saving for Retirement
Continuing on the “smart investing” subject, one of the best investing methods is saving for retirement.
It may seem far-fetched now, but one day you won’t be able to work. While this may seem like a dream, a lack-of-income can affect you deeply.
Social security can only provide so much financial stability. Some seniors aren’t even able to retire. To ensure you have financial security after you retire, start saving for retirement right now.
Fortunately, some companies include a 401k in their benefits package.
If your employer doesn’t offer this benefit, sign up for an IRA. You’ll add a portion of your income to this account. Unlike a savings account, you can’t take money out of your IRA unless you’re legally retired.
7. No Savings Account
How much money do you transfer into your savings account? One of the scariest facts about millennial financial mistakes is they don’t develop good savings methods.
This can be due to certain realistic issues, such as debt or parenthood. But if your money is going toward expensive technology and constant partying, then there’s a major issue.
No matter who you are, there are times when life happens and you suddenly have a major financial burden. For those who save, these situations are no problem.
But without a savings account, you could struggle more than you should.
8. Lack of Financial Guidance
There’s a reason why millennials develop bad spending habits: their parents have bad spending habits. If your parents lived paycheck-to-paycheck or were reckless with money, you’ll develop those same habits.
If you can’t seek financial guidance from your parents, there are other options available. Plenty of books and articles cover this topic. You can even speak to your bank representative for advice.
9. Not Using Employee Benefits
Employee benefits are becoming amazing. The 401k was mentioned previously, but other employee benefits include free health insurance, unlimited PTO, and even other amenities such as a gym membership.
If you skimp out on free health insurance or that 401k plan, you’re making a huge mistake.
10. Neglecting Your Credit Score
You may think “I’ll only pay the minimum payment” or “I’ll put this major payment on a credit card and pay it off throughout the year.” While you may think your debt is decreasing, your credit score is only getting worse.
So what’s the significance of your credit score? If you have good credit, you’ll receive a myriad of benefits. This includes lower car payments, a better mortgage, and money-saving credit card benefits.
It’s Time to Stop Making Financial Mistakes
Millennials have been taught to spend and not worry about the future. While consumerism has a heavy cloud over our heads, there are ways for them to develop better financial habits.
Young people frequently spend without saving or rack up credit card bills. But it’s not too late to end this habit. Understanding your financial mistakes is the first step to making better financial decisions.
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