We’ve all heard some older people saying “kids these days don’t know how to handle their money” at some point in our lives, and the truth is that millennials do tend to make some major mistakes when it comes to managing their money. Below are some tips that might help you become more financially savvy.
Not having a budget
Not having a budget is one of the biggest mistakes that a person can make. Fortunately, however, it is also the easiest mistake to rectify. A budget is a clear-cut plan which you can create and follow in order to better manage your money. It allows you to see how much money you have coming in, what needs to be paid (such as rent, utilities, groceries, etc.), and how much money you have available to spend and save after all your expenses. This can help you to ensure that you are not overspending on luxuries, leaving you unable to pay your expenses at the end of the month. Making a budget is simple and quick. You can make a hand-drawn plan, use a spreadsheet, or even use one of the many budgeting apps that are available. Whatever you prefer, making a budget and sticking to it is essential when managing your money.
Not having an emergency savings fund
An emergency saving fund is an amount of money that you have saved and that is available for unforeseen emergencies or expenses, such as car repairs, doctor’s bills, or even during times of unemployment. This should be separate from your regular savings as it is not for a particular goal. It is extremely important because not having emergency money can lead to more mistakes, such as overspending on your credit card or dipping into your regular savings. Setting aside a small portion of your income every month may seem like a waste of money now, but in the long run, it will make sure that you are financially stable, no matter the situation.
Trying to keep up with everyone else
We’ve all been there. Our friend has just purchased the latest smartphone or a brand new car and we decide that we must do the same. This is one of the biggest and most costly mistakes that we can make. Sure, your phone may not be the latest model but it still has everything that you need. And while your car may not have all the newest and exciting features, it still goes perfectly and gets you from point A to point B safely. Trying to keep up with your friends can lead to serious money issues such as excessive debt or having to dip into your savings, for something that you simply don’t need.
Not using credit cards properly
Credit cards are so easily accessible and come with great rewards and bonuses, such as cashback and travel points, that it is very easy to start using your credit card for every purchase. However, this can lead to serious debt and can make a huge impact on your credit score. Remember that all these rewards are great, but they are only beneficial when you are able to make your credit card payments every month. Credit cards should only be used for unforeseen or unavoidable expenses, and even then they should be used in conjunction with money that you have, and not used to cover the entire cost.