Millennial Money Mistakes to Avoid

Money advice for millennials

You constantly hear talks about millennial’s and how they are irresponsible and not good with money. There is a huge difference in personal finance strategies and beliefs between millennial’s and previous generations. The great news for millennial’s is they are still young and have plenty of time to get their personal finances in order. Millennial personal finance has their own sets of challenges, and also a variety of great solutions.

Statistics about millennial’s and money

Financial issues millennials have to deal with

There are a few financial issues that most millennials have to deal with that make it hard for them to get ahead. Once you recognize and address the issues, it’s a little easier to overcome them.

Too much debt

Many millennials are plagued with debt. Between credit cards and student loans, millennials have a load of debt to deal with. It causes a ton of stress because it can seem hard, if not impossible to deal with it. Especially with credit cards, it seems like there is no getting out when you’re barely covering the high-interest rates.

The average household with student loans has $49,905 in debt.

While getting out of debt may seem impossible there are a lot of things millennials can do to start. A good budget and putting together a plan to get out of debt is the best things you can do. Time and consistently will solve these problems.

Can’t afford rent and living expenses

Many millennials are flocking to big cities such as New York City, Los Angeles, San Francisco, etc. for a plethora of reasons. Some see great opportunities in the cities, it’s trendy, they like the lifestyle, or whatever other reason they see fit. One huge problem with living in these kinds of cities is they are EXTREMELY expensive to live. The average rent for an apartment in New York City is $3,526! That’s over $42,000 a year in rent and doesn’t count any of your other bills.

Luckily there are solutions to dealing with these problems for millennials. For one, take a step back and avoid the cities. Live outside until you can truly afford to live comfortably in the city. Lots of people live in New Jersey and commute to NYC, that’s a great thing to do until you get your finances in good condition. If you wanted, you could even completely change where you live. There are great opportunities in other cities around the country such as Austin, TX. Austin is a very popular city for millennials.

Also, try to cut expenses. There are a ton of ways to cut expenses to help your budget.

Managing a budget

Many millennials struggle with keeping a budget. There is a feeling of being held back by budgets, they can’t do the things they want to even though they technically have the money. Millennials tend to want to keep appearances up, they want to keep up with what friends and celebrities have. With social media influences so many people now it makes it even worse.

Anyways, keeping a budget can be hard but as I have mentioned in previous posts, it is important to keep up with these things in order to reach certain financial goals. One of the first things I would recommend is using something like Acorns, it is such a versatile tool for personal finance, especially for millennials. I love it because the round-up feature is a nice small way to add up savings plus with the other contributions, you can put together a nice little account. Also, it gamifies investing making it more fun.

An important aspect of budgeting for millennials is the actual budget itself. It is best to keep it simple to start, don’t get overzealous because it might lead you to give up. So start slowly with a basic budget and as you see success, start adjusting your budget to save more, pay debt down faster, invest more, etc. There are plenty of examples of people paying off high 5 figure to 6 figure student loans in only a couple years. It takes a lot of dedication to do but it is possible.

Being content

A big problem with millennial personal finance is that millennials are content. Maybe it is a shift to wanting simpler lives but they seem to get content with where they are and what they have. They make enough money to pay the bills and minimums on their loan and buy some beer for the weekends, life is good. I think growing up seeing the 2008 crisis and has changed the mindset and put fear or discouragement in millennials. That’s the wrong mindset though, personal finances are important and not difficult at all. While it may seem daunting at first, it is actually quite easy to get what you want.

No emergency fund

This isn’t just a problem for millennials but a problem for American’s in general. 63% of American’s don’t have enough saved to cover a $500 financial emergency. It is important to have an emergency fund of at least $1,000 just in case anything unexpected happens. To make it easier, set up a new account with direct deposit straight from your paycheck. $20 a week will get you to $1,000 in just under a year.

Ignoring employer retirement contributions

I don’t understand why people wouldn’t take advantage of this. I was talking to some friends recently who just set up their 401(k) after being at the company for 5 years. Their company matches 50%. You’re literally throwing free money away by not taking advantage of employer matching programs.

Waiting to invest

Again, another silly mistake, especially in today’s world. I think the problem is many millennials believe you need a lot of money to invest. That’s not true. You can start investing with practically nothing. As I mentioned, you can use an app like Acorns that invests for you with a very low minimum. The great part is it’s all automatic. Once you set it up and set the setting you want, it does everything for you. You don’t even have to do a lot at once, just round up your change, invest $10 or $20 per week, and watch your account grow.

Overspending on travel

I feel like this is a HUGE problem for millennials. With the world of social media and having a great Snapchat story or cool pics on Instagram people go beyond their means to impress others. People want that beautiful picture on the beach. And you can see it. Go to a beach and watch someone spend 10 minutes trying to take a perfect picture. I bet it’s for Snapchat or Instagram.

Travel tends to be a huge one, people are trying to impress others and travel all over the world. I get it, some people just want to travel to see new places and experience the cultures. The problem is when you don’t balance it out. You can’t spend all your money on travel when you’re not properly saving and investing. This is really important for millennial personal finance.

Millennial Personal Finance – Money Mistakes to Avoid Final Thoughts

Let’s be honest, millennial personal finance is a huge issue in today’s world. As the next big generation, it is important that their finances be in order and on a route to success. The amount of debt that burdens millennials are sickening, it is an epidemic. It’s nothing that can’t be solved though. Once you have all your debts paid off it will open you up to huge financial growth. Talking about some of the issues millennials have with their finances show how much they are related. Fixing one will help to fix another.

RELATED: How to Save Money in College

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