Common Financial Mistakes Millennials Make

Common Financial Mistakes Millennials Make

Being a Millennial in today’s world isn’t easy at all. You have to live in a world the older generation created because the one you’re creating is yet to become completely real. This is best reflected on how much you earn. 

No matter how big your pay is, it seems that you’re always trying to make ends meet. Since you can’t adjust the world to your needs, there’s only one option left: adjust your finances to the world. In other words, it could be that you’re just making one of these common financial mistakes. If you recognize yourself in this article, it’s definitely time for a change.

1. Saving money as cash

Preferring to keep your money in cash just means that you’ll spend it more quickly. As soon as you have cash in the wallet or at home, you’re tempted to spend it and feel like you have more than you actually do. Looking at the huge wad of cash at home just makes you feel like you have a lot of money to spend. 

Then, at the end of the month, when you count what’s left, you’ll be surprised at how little there actually is. To avoid this, it’s best to save money at the bank.

2. Not saving for retirement

The plan for your retirement starts now, not later. Not saving for your retirement is a huge mistake that will surely haunt you as the years for your retirement approach. 15% of your pre-tax income each year should go towards your retirement funds. 

Not making that much money isn’t an excuse not to think about your future. In this care, it’s essential to reconstruct your life so you can live on less than you make. Setting aside even minimal amounts towards your savings account and retirement plan monthly can make a huge difference. 

3. Not being proactive about your health

You need to take care of your body and mind even when they’re healthy. Missing regular checkups or not going to the therapist on a regular basis just piles up the bills later. That checkup might cost you something now, but it’s much easier to cure the symptoms than the disease you’ll inevitably develop. As well as that, prevention is much more effective and better for your health. It’s much more expensive and time-consuming to treat an illness than it is to go to regular checkups.  

This goes for your doctor, your dentist, and your gynecologist or urologist. Conducting a blood test and going to physical examination every few months or yearly is essential. 

4. Spending at the rate of your earnings

Living in the moment is a cool life motto and something young people often take to heart, but it’s not the most financially responsible way to live your life. No matter how harsh it sounds, the truth is that you’ll never reach financial freedom if you keep increasing how much you spend as your earnings go up. Just because you got a bigger pay doesn’t mean you should upgrade to a bigger apartment or buy a better car.

You don’t need that all-inclusive vacation just because you have more money now, either. If you managed to live without these things while you had a smaller pay, you’ll manage just fine without them now. There will be time for all these things in your life, now is the time where you set the grounds for financial freedom that you get to enjoy later and for longer. Minor belt-tightening can have a great effect on how much money you have saved at the end of the month. It’s little things like this that give you more financial stability with each passing paycheck.

5. Not having any savings

A rainy day fund and an emergency fund are completely necessary. Most Millennials don’t have one fund, let alone two. It’s very important that you have both because life will be much easier to handle when you’ve got backups. No matter how stable your pay is, a rainy day fund will help you any time you get less than expected, if the pay is late, or if you’ve just got more things to pay for one month.

An emergency fund is there for emergencies, naturally. From car trouble to medical bills, you won’t have to suffer because you’ll have all the money you need in your fund. If you’re not very good at managing funds yourself, you can always ask a professional personal accountant for help or hire them to manage your funds for you. It may seem counterintuitive to hire someone when you’re trying to save money, but it will definitely pay off in the long run.

6. Letting debt pile up

Debt is very real and present in the lives of many Millennials. Whether it’s the loan you took out for your home or car or the student debt that seems to pile on forever, you can’t neglect the debt you have. You may think that you’ll pay it off eventually and when you’re more financially stable, but the interest rates will only go up and you’ll be paying it off for the rest of your life.

Instead of pushing the problem under the carpet and letting it eat you up later, you should make an effort to make minimum payments each month. Even if you can put 20 dollars towards your debt, it’s definitely going to help. Minimal payments won’t affect your finances much, but they’ll pave the path to financial stability and a debt-free life much more quickly.

As you can see, these common financial mistakes really do make a difference. Making ends meet doesn’t have to be your goal every month. You can still have money left over and live a normal and happy life even if you don’t have a huge paycheck. Changing your financial strategy is imperative and with these tips, you’ll know exactly what financial mistakes to avoid in order to be truly financially stable.

Featured Photo by Tim Gouw on Unsplash