Fear coupled with misinformation has halted a whopping 38% of Millennials from making sound financial decisions. That’s right, the generation with the most to gain from a long stretch in the stock market is stalling on taking the right measures because of what they have to lose.
For Millennials hoping to have a viable financial future, here are five money-management mistakes to be aware of:
Thirteen Dollar Brunch Mimosas
Recent food trends like the Foodie movement are getting people hungrier and hungrier for good eats and Millennials are leading the charge. Their habit of pouring over review apps in the name of a good food find have become notorious and restaurants across the sphere are looking to profit from their new found obsession. This coupled with other socially-induced purchases of apps, travel and clothing are taking quite a toll on Millennial bank accounts. Of course most of them are aware that could stand to save a lot if only they opted to stay in.
For the Millennial looking to save get your partners, friends and family to try a new diet. That’s right, put these superfluous expenses on ice. Reel back on costs that stem from brunches, bar hops, coffee runs and shopping sprees. The change doesn’t have to alter social habits and can be a lot easier if you get others involved. Instead of running up a tab at a traditional brunch spot opt to host a potluck instead, for those who love a good shopping day, get your friends to do a trade day.
In 2013, a survey revealed that 70% of college students in the U.S. graduated with a debt price tag averaging $30,000 in student loans. While student debt can be expected for today’s Millennial, the study revealed something pretty jarring. Twenty-eight percent of those students surveyed were completely unaware that they had debts. What’s more, 14% of those students who had federal loans said they had no student debt at all. The only thing is, slowly fading out financial woes won’t work out as well as an ignored text message.
If you’re a Millennial, the first step in combating this typical money mistake is to get a good review of your finances. Digging into loans and having an understanding of the different types of debt you have obtained can ease the chances of being blind sided by unpaid dues. If you find that you do have debt, start putting as much payments towards them as possible. While making minimal payments will help, the larger your payments are, the faster you will dig yourself out of your hole.
Buying The Cheap Stuff
Low-cost purchases can be a smart move when you’re on a low budget. Still, they’re not always the money saver they’re cracked out to be. For important items like mattresses, cars and computers make a quality investment. That’s not to say that you should go out and pick up a California King or a Rolls-Royce. But consider the long-term investment. Continued replacement purchases can cost you in the long run.
The best way to stop with cheap spends is to remember that they’re ultimately purchases that send money down the drain. No one can afford to lose money and those that think they can aren’t being practical. Look into the options of your purchases. Make selections based on items that offer the most value and then consider how to reduce costs. Consider purchasing a used quality
YOLOing Through A Budget
Everyone knows the benefits of running on a “You Only Live Once” mentality. For Millennials it's common life motto that’s helped them to become the most well traveled generation of all time. Still, everyone should know spontaneity and budget planning don’t mix. A solid budget will ensure funds don’t trickle out when inevitable impulse and unplanned expenses pop up in life.
To keep on track with financial goals, Millennials should figure out a budget that accounts for personal finances like rent and food and long-term investments such as life insurance. With thousands of budgeting apps, just a click away poor financial planning no longer has an excuse.
Not Building A Relationship With Credit
No one needs a corny musical credit card commercial to tell them credit is important. Still, most Millennials are clueless about how to establish a good credit score. Three financial crisis have deterred most of them from finding out or making the sign up. Still, while credit card debt poses its risks, it’s important for Millennials to learn that payment methods like debit cards or checks won’t always be a viable option.
Low credit scores can mean an increase in insurance, car financing, and mortgage rates so Millennials should do their best to acquire credit early. Establishing good credit in your 20s will for bigger purchases in the future. Start by pairing up with a good credit card and then developing smart credit-card habits.