Millennials are generally described as those born between 1982 and 2002. These are people who have grown up with technology. They have information at their fingertips 24 hours a day. No previous generation has had easier access to financial planning tools to help them plan their future.
There is a downside to being a part of the Millennial Generation as well. Though much-needed information is available, this generation gets mixed signals when it comes to their futures. Many have been told that they are guaranteed a well-paying job once they finish their college education, which has caused them to accept student loans without considering how to pay for them once out of college. Millennials are also subject to identity theft and, perhaps due to their comfort with technology, tend to be less careful with their personal information.
Millennials have plenty to learn when it comes to safeguarding their credit and building a comfortable future. Avoiding mistakes and capitalizing on money-building options can help to secure a brighter tomorrow.
10. Excessive Spending
Spending more than one can afford is always a mistake. Millennials are apt to fall pretty to excessive spending thanks to the easy lending practices found with some credit cards. While those who are building their credit should always have and use credit cards, they should never spend more than they can pay.
9. Not Paying Credit Card Balance In Full
Credit card companies make money by charging interest to their customers. Some cards even charge a supplemental fee for each month that the balance is not paid in full. An individual who uses a credit card wisely should be able to use their cash reserves each month to avoid those fees.
8. Avoiding Credit Cards
Some Millennials feel that they are better off without a credit card. Their notion is that if a card is not owned, it cannot be abused. Unfortunately, credit reports rely on wise spending choices, not the lack of them.
7. Not Taking Advantage of Rewards Programs
Credit cards are given a lot of flack, but the fact is many of them are extremely beneficial. Many offer many rewards and benefits. Before taking out a new credit card, Millennials should research the best reward credit cards through sites like TopTenReviews. Some rewards might include a contribution to an IRA, gift cards to popular shops and restaurants, or money to pay down the existing balance.
6. Using Payday Loans
Predatory lending practices are never more prevalent than with payday loans. These institutions charge exorbitant fees for even the smallest loans. If an individual cannot repay the loan in time, they simply add even more to the already high price tag. The FTC offers more information.
5. Student Loans
One of the biggest conundrums for Millennials is how to pay for a college education. No one argues that higher education is unimportant. A college education is vital for personal growth as well as a future career. However, the price of college is only becoming more expensive. Still, there are alternatives to student loans that should be thoroughly explored. Many states offer tuition assistance for residents who meet certain grade or financial guidelines. This might require going to a junior college for a couple of years before transferring to a university. Military members can take advantage of the GI Bill to pay for school. Some colleges and universities offer tuition assistance to employees. Working full-time while going to college part-time is also a reasonable choice to avoid a devastating student loan bill.
4. Buying the Wrong Home
Millennials have benefited from the housing bubble burst in a way they may not understand. In recent years, it was relatively easy for anyone to get a home loan whether they could afford to make the payments or not. Now, home lending practices are tighter and individuals are forced to make more conservative decisions when considering a new home. Millennials should take the time and care to find a starter home that fits within their needs and their budget while also paying attention to resell value and any repairs that may eat into their wallets.
3. Not Buying a Home
Renting is sometimes the better option. This is true for those who don’t have job stability or may find themselves needing to move within the following three years. While renting and paying on time can help to build credit, it does not build equity. In most instances, it is better to own than to rent.
2. Overspending on Vehicles
Some Millennials may choose to avoid owning a car, relying instead on walking, biking, or mass transit. However, this is rare, as most need or want a vehicle of their own. One of the biggest mistakes made by Millennials is choosing a vehicle that is beyond their needs. A single person probably does not need a $40,000 SUV that gets 16 miles per gallon.
1. Not Saving for Retirement
The biggest mistake made by Millennials is one that won’t be felt for 40 to 50 years. Saving for retirement may seem next to impossible for someone who is just entering the workforce, but even the smallest amount of savings can help in the long run. According to the Employee Benefit Research Institute, average Americans only save about $25,000 for retirement. This is mostly because they start saving too late in life. Even setting aside $100 each month is a good way to get started, though eventually Millennials need to max out their yearly contributions.
Chris Lindsey is a writer who enjoys credit, finances, business and technology. He is a golf fanatic and loves to be on the lake. You can find him on Twitter.
Image Credit: Shutterstock.comSubscribe to the Podcast