We all make mistakes. What’s more important is whether we learn from them. To be even more awesome, level yourself up and learn from the mistakes of others in order to avoid falling into the same traps.

Millennials (Pew Research declares them as anyone born between 1981 and 1996) have been ridiculed for their apparent personality flaws, praised for their diligence and determination, probed about their various preferences and compared to other age groups relentlessly. However, generalisations aside, millennials are just people – comprising a large portion of the younger adult population throughout the world.

Young adults of this age are privy to transitioning career norms, with company loyalty in decline and the rise of the gig economy. Some are focused on building intriguing careers or startups and businesses with high failure rates and not much opportunities for benefits.

With rising living costs, young adults nowadays have more reason to avoid money mistakes. Read on to learn some common mistakes you must be aware of.

#1. Postponing Saving

People who have a small amount of money left over after paying their bills may fall into the trap of promising to start saving as soon as possible. This way of thinking is harmful because our lives often become more expensive as we get older.

You don’t need to live within your means to go ahead financially; you need to live below your means. Take advantage of any additional money you receive in the form of a bonus, raise, or promotion by increasing your savings, not just your lifestyle. Finding a means to save a little money each month is a great approach to get ahead and move closer to your financial goals.

#2. Ignoring the Financial Consequences of an Expensive Wedding

Sure, it’s one of the most significant days of your life, but it’s also crucial to make sure you’re not saying “I do” to undue financial hardship.

Cakes, flowers, photographers, planners, locations, and venues are all expensive when the word “wedding” is mentioned. Many millennials feel that due to social media, they have to have a big wedding, yet there can be a very real and significant financial trade-off between cake and punch and buffet vs. an open bar. Consider the future beyond Day 1.

Marriage is a lifetime investment, not just a one-day splurge.

#3. Having Too Many Credit Cards

You’re standing in line at the checkout counter, and there’s a once-in-a-lifetime chance to save $25 or 10% on your first purchase if you only take a few minutes to open a store credit card. Does this ring a bell? We’ve all been there, and despite the short-term financial perks or savings that opening a new line of credit may provide, you should nearly always say no!

Buying using credit is a fantastic method to earn points and prizes, and it provides more fraud/identity theft protection than using a debit card. However, credit cards require personal discipline and continuous monthly payment of the entire sum to be used efficiently.

Find a few decent credit cards and use them properly to reap the benefits and improve your credit score but avoid the temptations and inconveniences that come with carrying a credit card in your wallet for every store you’ve ever visited.

#4. Splurging On A Vehicle Just Because You Can

Even if you’ve done your homework and know how much you can spend, it’s easy to fall in love with the better model with the premium wheels and entertainment package after taking a test drive.

But don’t do it; only get the vehicle you require!

While it feels good to have a luxury ride and bragging rights that come with it, be aware that money saved by instead selecting a somewhat nice ride at a cheaper price could be used to start a rainy day reserve or increase your retirement savings.

Furthermore, an automobile is a depreciating asset, meaning its value decreases as soon as you drive it away from the showroom.

#5. Splurging On A House

Buying a house before you’re ready to take on the financial duties might put a rapid strain on your finances. The goal for millennials should be to purchase a home that satisfies their necessities while also allowing them to develop equity, rather than the fantasy home they want to retire to.

The monthly mortgage payments, as well as the price of maintenance, utilities, and real estate taxes, can be stressful for many first-time homeowners.

When outfitting a home, it’s also necessary to move at a fair pace and decorate on a budget. Buying a lot of furniture or expensive accent pieces at once can drain your bank account or lead to recurring credit card debt. A new home doesn’t have to be done in a day, and you don’t have to start with your dream home, just a simple one to begin with.

#6. Not Learning How to Say No

Maybe your friends are teasing you for not spending big. Maybe you are saying “I deserve this” without truly weighing your options.

Whichever the case, it’s important that you learn to pause and reflect upon the consequences of your decisions. Here are some articles you may find helpful:

#7. Ignoring The Numbers

It’s important to know your numbers. Many young people find this tiresome and annoying. But hey welcome to adulthood!

You may think “Nah, I’m doing alright; why bother?”. Well, because you’re missing out on the power of compounding interest. At the same time, you’re also leaving yourself vulnerable to future financial trouble.

Some numbers to take note of to future-proof your finances include:

Conclusion

Adulting is hard but don’t make it any harder than necessary! Talk to your elders to better understand how to prioritize what’s truly important in your life so you can make better money decisions.

 

What other money mistakes do you think young people should take note of?

 

You May Also Like