Millennials – Don’t Make These 5 Money Mistakes

By Fergus Cleaver

If you’re a millennial, you’re probably sick of hearing about what’s wrong with you. Who wouldn’t be? You’ve been accused of everything from laziness to job hopping, none of which is true.

Millennials do have one bad tendency that will impact the rest of their lives, however, and that’s making mistakes with their money. If you’re a millennial and managing your money isn’t on your radar, it’s time to take control. Your future depends on it. Here’s what to avoid:

  1. Not knowing what comes in and what goes out. You probably have no idea how much you spend as opposed to how much you bring in. Sit down and list your monthly expenses. Include rent or mortgage, cable, gym memberships, utilities, loan and credit card payments. Total them up and subtract from the amount you bring home every month. That’s what you have left over for groceries, eating out, gas and other expenses.
  2. No set priorities. If you have student loans and/or credit card debt and are only paying the minimum every month, you’ll never pay them off. Paying off debt has to become a top priority.
  3. No budget, no way, no how. Do you know how much you spend on coffee, eating out and other nonessential fare? Take a week and track your spending. Isn’t it amazing how quickly money passes through your fingertips? You know how much money you have after bills, you’re aware of your debts and now you know how much you spend frivolously.

“It’s time to sit down and come up a budget. Eat out once a month instead of once a week and make paying off debt a top priority.” – Fergus Cleaver

  1. No retirement or emergency savings. You’re probably asking how you can save money and pay off debt at the same time. Rest assured, you can do it. There are simple ways to save money for both emergencies and retirement. For example, many workplaces offer retirement plans, sometimes offering matching contributions. If your employer offers a retirement plan, take advantage of it. Also take advantage of interest bearing savings accounts. Set up automatic transfers to make sure a little money goes into your savings account each payday. It’ll add up quicker than you think.
  2. Addicted to debt. You have a student loan. You have credit cards you don’t hesitate to use. Debt is a way of life. But you can break free. Put the credit cards away. Pay off balances. If you do use a credit card, pay the entire balance off each month.

Final tip: Never spend more money than you make and save as much as you can. That’s the key to long-term financial security.

Fergus Cleaver is a shareholder in Cleaver Partners, an international accounting firm based in Auckland, New Zealand.