Financial Mistakes for Millennials to Avoid

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The Millennial generation is the largest generation in U.S. history, outnumbering even baby boomers. They’ve grown up through a time of great technological change and advancements. Unlike previous generations, they’re waiting longer to marry and settle down and place less importance on ownership, opting instead for accessibility to products and services. Millennials also stepped out of school and into an economy that has seen some better days. With smaller incomes and lower employment levels, Millennials have been left with far less money than previous generations. So, in an economy ill-suited to receive them, how should Millennials work on accruing savings? Here are a few financial mistakes all Millennials should avoid in the pursuit of financial stability.

1. Don’t shrug off your budget.

In order to figure out the best way to delegate your money, you need to have a plan on how to spend it. Use the countless technological resources at your disposal and find a budget app or website that you think will work and commit to building a budget and sticking to it.

2. Don’t overspend.

As exhilarating as it is to get your first paycheck and have money to spend at your disposal, it can also be risky. If you’re an overspender, then as you begin to earn more, you begin to spend more as well until you’ve fully succumbed to lifestyle inflation, or living at the peak of what you can now afford. Best case scenario, this means that you’re now living paycheck to paycheck, a practice that does not allow you to save up money and build your savings. Break these habits before they start by planning and preparing to live below your means and save what’s leftover.

3. Don’t wait to start saving.

It’s never too early to begin preparing for retirement. If you’re 25 and start saving versus waiting until you’re 35, you’ll have a significant amount of money — to the tune of nearly a quarter of a million dollars — more than if you’d waited. You want to make sure you keep three months worth of living expenses in your savings in case of an emergency, and if your job has a 401(k), sign up and contribute at least as much as your employer is willing to match. You’ll double the money you invest, and anything you invest will be taken from your paycheck pre-tax.

4. Don’t ignore your debt.

If, like many millennials, you’ve recently graduated from college, you’re probably all-too-familiar with the hefty price tag that comes along with the degree. If your plan thus far has been to ignore the loans and hope that they go away, you’d better change it. Unpaid debt will ultimately tank your financial health over the long term and can lead to irreparable damage, so as tempting as it is to put it off, paying off debt should be a primary concern for anyone looking to improve their finances.

5. Don’t skimp on healthcare.

During times of good health, it’s easy to put worrying about your health on the back burner. Unfortunately, chances are that at some point you will need medical attention, and as costly as insurance can be, uninsured medical bills will be exponentially more expensive; an ambulance ride alone can cost well over $1,000, a bill often footed by insurance companies.

A new sense of financial freedom can fill you with excitement, but you shouldn’t let your spending get away from you. Enforce good spending habits early and don’t let yourself fall into a paycheck-to-paycheck lifestyle, and if you pull yourself out of one, remember what it was like to live like that with no money to fall back on so you can avoid picking up old bad habits.