Common Millenial Money Management Mistakes
Millenial money management can be difficult but is absolutely necessary.
One or two bad financial habits can quickly lead to growing debt, and even cause you to come up short month after month.
The newest generation of adults entering the financial world, millennials, want to achieve financial independence but seem to stumble into many pitfalls that can negatively affect their financial future.
Below are some of the most common millenial money mistakes when it comes to money management.
1. Spending Beyond Their Means
Many millennials fall into the trap of living well beyond their means of support.
Whether it is the need to keep up with the Jones’s, or spending in the same manner they did when their parents were covering their expenses, many millennials are finding themselves in serious debt at a young age.
Excessive debt, and the possible credit problems that it can bring consequences for years, such as problems borrowing money, higher interest rates, and the constant stress of just trying to get ahead financially.
2. Not Staying on Top of Their Credit Score
Good credit is a crucial part of a strong financial future.
Young adults will need better credit than most to help them secure financing for a home, business, and loans.
3. Not Creating or Sticking to a Budget
Budgeting is not one of the most exciting things to do with free time.
However, it is a vital tool to help secure a solid financial future.
Many millennials have the mindset that a budget equals deprivation when it actually can reduce stress and help put you on a better path to achieving your financial goals.
A budget sets limits for all of the expenses and it’s crucial to stick to these limits.
When budgets are not adhered to, card balances will rise, and savings will be depleted, slowly putting financial goals in jeopardy.
4. Not Saving for Retirement
Even when millennials have a budget, they may not set aside money for their retirement savings.
While retirement may be the furthest thing from their mind, investing in a pension fund early cannot only help ensure that you have the proper funds that you will need for your retirement but also allow your money to grow longer.
This means a better return on the money than would be gained by investing it later in life.
Millennials without a lot of expenses, the best route may be to invest up to what the company will match.
5. Failing to Plan for Emergencies
Emergencies can happen at any stage of life, and when they do, it can have devastating consequences on finances.
Having an emergency fund is crucial to get through these emergencies.
This avoids you having to go into debt, or delaying payment on bills.
We advise to have at least three to six months worth of net after tax income in savings
If you use these due to emergencies it’s important to replenish them.
6. Lack of Understanding of Money Basics
Standard curriculums in public schools don’t focus on financial literacy skills.
There is little to teach students about the basic money concepts.
Concepts such as debt, credit, and interest, to help them learn how to manage money and make smart financial decisions.
Millennials have to learn these concepts on their own or seek help.
Whether it is a lack of understanding finances, failing to plan, or overspending, millennials succumb to many mistakes when it comes to finances.
The best way to avoid these common mistakes is by understanding them and continuing to seek education on money management to help secure a financial future.
Next Steps
Would you like to make your money more effective and work harder for you?
Learn more about the value of financial planning and schedule a call.
Francis McTaggart CFP® SIA RPA QFA
Disclaimer: All content provided in these blog posts is intended for information purposes only and should not be interpreted as financial advice.
You should always engage the services of a fully qualified financial planner before entering any financial contract.
Fortitude Financial Planning Ltd will not be held responsible for any actions taken as a result of reading these blog posts.
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