Bill Gates once said, “It's fine to celebrate success but it is more important to heed the lessons of failure.” As millennials belong to the age group of 18-32 years, they achieve one milestone after another in their lives. They celebrate adulthood with a fresh sense of independence derived out of it.
But along the way, they’re equally prone to make a series of blunders, especially financial ones, whose adverse effects could come back to haunt them decades later.
So, here are some strange but true money boo-boos committed by the millennials that can and should be avoided. Heeding to these financial mistakes will equip them to take control of their dollars as adults, and set them up for a successful retirement.
Believe it or not, most of the millennials have already committed one or the other financial mistakes shared here that don’t look fashionable at all:
As a millennial, you move into adulthood, leaving your college days behind and that’s why you should take control of your dollars and plan for a financially-secure life ahead. It’s because of this that you should maximise the monetary advantages of your employer-sponsored 401(k).
Earning your own bread and butter feels miraculous. Beware! you could trespass into the prohibited zone. Increasing paycheck may compel you to raise your stakes and fall prey to lifestyle inflation. As a result, you could end up exhausting all of your paycheck and beyond, for months on end.
Even if you’ve been smart enough to duck breaking your bank and emerge debt free, you must be living paycheck to paycheck. Such a lifestyle and money management strategy won’t help you save money for your retirement, forget about paying for big-ticket items like a home, marriage, children, vacations, and finally, retirement.
The Brookings Institute in a 2013 study claimed that almost 70% students graduating out of college had on an average $30K as student loan debt.
Surprisingly, 28% students were in the dark about their indebtedness and went on record saying they had no idea that they owed any kind of federal student loan debt, while another 14% said that they don’t have any college debt whatsoever.
Most student loan debtors can’t afford to buy a home or grow their wealth just because of their college debt, not considering other debts like credit cards, payday loans or car loans.
It’ll cut down your loan terms and save you hundreds or even thousands of dollars.
Bankrate’s survey revealed that almost 69% people aged between 18-19 years have zero retirement fund, regardless of the amount saved.
May be for you too, retirement is still far off from now to think about building up a retirement fund.
One of the easiest ways to start creating your investment portfolio is by contributing to your 401(k). Make sure to take full advantage of your 401(k) that's matched by your employer’s contributions.
Due to poor credit score, your loan cost will increase. You’ll have to pay more in interests for loans like mortgage, car loan, credit cards, and so on.
If you emphasise building a strong creditworthiness now in your 20s, then you’ll be in a better position to make big ticket purchases later on. To start with, you can opt for an affordable credit card and use it wisely to build your credit. Make sure you develop some praise-worthy credit card habits. If you’re battling with overwhelming balances, then you may seek professional help to devise a practical bill repayment plan to help you off your piled up outstanding bills.
Would you like to share some of the financial boo-boos of your life to guide your fellow readers into making wiser monetary decisions?
Feel free to share your thoughts in the comments section below.