Top 5 Money Mistakes Millennials Make and How to Avoid Them

There is no doubt that millennials are the most informed generation. The Internet gives them the information they need on just about anything, including personal finance and building wealth. However, as well as being a wealth of information, the Internet can also be quite confusing and contentious. The information available on the web comes from different people with different opinions.

So it’s true that in addition to having so much information, there are still plenty of millennials who are making money mistakes and getting into holes that will take years to get out of.

Here are 5 of the most common financial mistakes millennials make and how to avoid them.

student loans

Education is important in life and many millennials want to pursue expensive careers or attend prestigious universities. But, what many are not considering is whether the course they are following will generate enough income to justify the expense.

Before taking out a student loan, you should consider the following:

• How much do you expect to earn monthly?

• How much will you have to pay monthly?

• How long will it take to pay off the debt?

luxurious lifestyle

We live in the age of social media where people show off their “luxury” lifestyles on Instagram and other social channels. Many millennials feel pressure to show off on social media and therefore end up spending money they don’t have to impress people they don’t know and don’t care about.

Do you really need a $2,000 smartphone, an expensive wedding, a lavish lifestyle, spending $$$ on drinks with friends just to take pictures and brag on social media? Use social media sparingly for socializing with friends and family and more for business and your life will never be the same.

Wait too long to start saving

There are some millennials who start saving early, but there are also those who wait too long to do so. If you’re waiting to get “settled” to start saving money, you’ll realize when it’s too late that you should have started early. If you have more than one job or receive unexpected money from other sources, build your savings or invest the extra income in long-term investment options.

too many credit cards

People are wired for instant gratification and millennials especially. You want what you want and you want it now. This has led many millennials to apply for too many credit cards. This leads to perpetual debt that you never seem to get out of. Try to use cash as much as possible and avoid getting more than one or two good credit cards to build your credit score. Also, avoid always having your credit card with you, as this will lead to impulse purchases.

luxury travel shopping

A car is not an investment. It’s a depreciating asset. Only buy a car that you need and can afford. Actually, it is recommended that you buy a car that you can pay with cash or most of the money up front. Don’t try the fancy models, as this will tempt you to take out a loan so you can ‘treat yourself’.

Also, while you invest money, remember to also save for retirement and consider having an emergency fund.