People in their 20’s and 30’s today are faced with great financial decisions, maybe even more so than their parent’s or grandparent’s generations. Millennials often make financial blunders between graduating college and starting their lives as adults. Here we have some of the most common financial mistakes millennials make, and some ways to remedy them.
1. Failing to Save for Retirement: Most millennials are faced with piles of debt from student loans as soon as they step into the real world. Many make the mistake of trying to pay off this debt, but fail to see the importance of saving for retirement. They make think I just started my career, retirement planning can wait. The truth is though, the absolute best time to start saving for retirement is in your 20’s when you first start getting regular paychecks. The solution? Millennials should make payments on their student loans, while also setting aside money from each check toward retirement.
2. Accruing Credit Card Debt: While establishing good credit is an important part of being a young adult, accruing TOO much debt can have an adverse effect on millennials’ financial goals. People in their 20’s should have one or two credit cards to establish their credit history, but should only make small purchases each month (like gas or groceries) on each card. They should then pay the balance in full each month, to avoid high amounts of interest. Credit cards should never be used to finance lavish trips, expensive furniture, or nights out on the town.
3. Competing with Their Friends: One of the biggest problems faced by this generation is feeling peer pressure to accomplish all the goals that their friends are. Millennials see others getting married, buying houses, and having kids and often feel that they are some how behind if they too don’t have these things. The key to avoiding financial blunders as a millennial is acknowledging what you CAN afford. It is fine to have those goals, but millennials shouldn’t rush into huge financial commitments, until their income supports those goals.
While millennials are faced with some tough financial decisions, it is important for them to establish clear goals and always live within their means.