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There is no doubt that millennials are the most informed generation. The internet provides them with essential information about just about anything, including personal finance and how to build wealth. However, in addition to being a wealth of information, the Internet can also be quite confusing and conflicting. The information available on the web comes from different people with different opinions.
So it is true that in addition to having so much information, there are still many millennials who are making money mistakes and digging themselves into pits that will take years to climb out of.
Here are the 5 most common money mistakes millennials are making and how to avoid them.
student loan
Education is important in life and many millennials want to pursue expensive degree courses or attend prestigious universities. But, many are not considering whether the course they are pursuing will bring in enough income to justify the expenditure.
Before taking a student loan, you need to keep the following things in mind:
• How much are you expected to make monthly?
• How much do you have to pay monthly?
• How long will it take you to pay off the loan?
luxurious lifestyle
We are living in the social media era where people flaunt their “luxurious” lifestyles on Instagram and other social channels. Many millennials feel pressure to show off on social media and therefore spend money they don’t need to impress people they don’t know and who don’t care.
Do you really need a $2,000 smartphone, an expensive wedding, a lavish lifestyle to take pictures and spend $$$ on drinks with friends to show off on social media? Use social media sparingly to socialize with friends and family and for business, and your life will never be the same again.
waiting too long to start saving
There are some millennials who start saving early but there are others who wait too long to do so. If you wait until “stable” to save money, you’ll realize before it’s too late that you should have started sooner. If you do more than one job or you get windfall money from other sources, increase your savings or invest the extra income in long term investment options.
too many credit cards
People are wired for instant gratification and millennials in particular. You want what you want and you want it now. Due to this many millennials are applying for too many credit cards. This leads to perpetual debt from which you can never get out. Try to use cash as little as possible and avoid having more than one or two good credit cards to build your credit score. Also, avoid always carrying your credit card with you as it can lead to impulsive purchases.
buy luxury ride
A car is not an investment. It is a depreciable asset. Buy only the car you need and can afford. In fact it is recommended that you buy a car for which you can pay cash or put most of the money up front. Don’t test drive the plusher models as this will tempt you to take out a loan so you can “treat” yourself.
Also, while you invest money, remember to save for retirement as well and consider building an emergency fund.
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