7 money mistakes you're probably making if you're a Millennial
Learning to properly manage your finances can feel almost impossible. It seems like no matter how hard you work or how much money you make, it’s just never enough to cover all the things you need and want to do. However, it’s possible you might be making some money mistakes without even realizing it. It’s okay; we’re all guilty of a few bad financial habits, and the first step is becoming aware of them.
Perhaps it’s because money management is so stressful — a lot of us kind of ignore the complicated parts and just wing it. Or maybe you try to stay on top of things, and you just don’t realize a few areas you’re letting slip by. Either way, in order to maintain some semblance of finance freedom, there are some truths about money that we all have to learn.
And to help you do that, we’ve compiled a list of common money mistakes many Millennials currently make.
1Not saving enough.
Or worse, not saving at all. There’s a reason why there are so many tips for saving money from financial experts all over the internet. According to Jennifer Barrett, Chief Education Officer at Acorns and Editor-in-Chief of Grow, the easiest way to save some extra money is by setting up automated transfers to your savings account.
“Making it automatic is the single most effective way to hit your savings goal. I have money automatically transferred not just to a 401(k) and IRA, but to a regular investment account for mid-term goals and to a savings account for unexpected expenses and short-term goals,” she told Bustle. Seriously, if you don’t have a savings account yet, you should start one.
2You don’t check your credit report.
We know you’ve heard it before, but if you don’t check your credit report at least once every six months or so, you may be setting yourself up for future problems. A study conducted by the National Foundation of Credit Counseling revealed that being aware of your credit report can help you detect and dispute errors, identity theft and credit card fraud early on, and even save you money by just being proactive about your credit. Plus, it’s never been easier to check your credit on line via free apps and sites like CreditKarma.com.
3Avoiding the “money talk” with your significant other.
Talking about money is awkward, especially in the early stages of dating. But if you’re thinking long-term with your partner, this is an essential conversation to have. Relationship expert Alysha Jeney told us, “It’s important to understand each other’s money management, as well as each other’s expectations for shared expenses and future planning. You don’t need to share each other’s bank statements, but after a year of dating, it would be ideal to discuss yearly income and individual debt. It’s also important to discuss ways in which you can support each other’s lifestyle financially as a couple.”
4Trying to live above your means.
Living above our means is a money mistake a lot of us make, because it’s honestly so easy to do (especially in the age of credit cards). To avoid it, it’s important to make sure you aren’t spending more than you’re earning. The wonderful folks over at mymoneycoach.ca note that living within your means is an essential money management skill that will help you sidestep debt. Not only will it free you from money worries, but it also gives you the freedom to make choices in the future based on your desires instead of based on what you can afford.
5You’re trying to buy a home, instead of renting one.
There seems to be a little bit of an obsession when it comes to Millennials buying houses. But the fact is, renting a home not only allows for flexibility, but it can also cost less over the long term — as counterintuitive as that may sound. When you combine a large down payment, property taxes, repairs, and maintenance costs, you may only come out even — or even worse — when you buy instead of rent. Make sure you’ve truly crunched the numbers before committing to a big home purchase.
6Not sticking to your budget.
One of the biggest money mistakes you can make is failing to follow your budget. Without a realistic budget you are more likely to spend more than you should — which could quickly lead to debt. And remember — a budget doesn’t mean deprivation! It’s just a spending plan that maps out what your expenses are for the month, and how much you can allocate for each expense (like avocado toast). This way, you get a clear picture of whether you’re living within your means.
7You don’t have an emergency fund.
Life is unpredictable. You never know when you or someone you love will end up in a situation that will require a little extra money. Just like the savings account, you can set up an automated transfer for an emergency fund.
Taking control of your money can be life-changing. The security of financial freedom is empowering. Start small, start today, and you’ll get there!