Money Mistakes You Should Avoid for the Millenials
You’re fresh out of college and you’re excited if terrifyingly so for your first job. Welcome to the real world.
Gone are the days of cheap take out dinners, a room you share with others and insubstantial college income. You’re no longer working part time but full time expecting two paychecks that will make you small per month.
Adulthood doesn’t get any real as soon as you receive you first paycheck. You might already have planned out how you’ll spend every penny. You might even think you have a lot of money now. That may be true but it won’t go a long way unless you are smart about your money.
If you’re a millenial and hopes to achieve financial freedom along the way, here are money mistakes to avoid at all cost:
Not saving for an emergency fund
There is no better time to build an emergency fund, a fund reserve solely for unexpected expenses and emergency, than now. This fund also comes handy in case you lose your job, which you may not need to worry about yet. In any case, it pays to cover all your bases.
Stash away about 3 to 6 months worth of expenses to fall back on in case something happens. You can also start small if you think it difficult to squeeze in this habit at the moment. If you can only set aside 3% of your income per month, that’s a good enough start. The trick is to keep doing it month after month. A small amount can add up quickly over time.
Not paying yourself first
Other than the emergency fund, there’s another type of savings you should think about it. Decide how much you want to set aside per month for savings you can use for a variety of purposes. It can be for vacation, home or car down payment and many more. The trick is to pay yourself first meaning set aside the money first before anything else.
If you want to set aside 10% per month, set it up automatically. This way, it will be easier to save and work on what’s left of your paycheck after paying yourself first.
Not using your credit cards wisely
One of the most common and vicious downfalls for most consumers is credit card debt. With its high interest rate and promise of instant gratification, credit cards in most cases are disadvantageous unless you use it right.
When using credit cards, it’s very important not only to plan how you use it but also where you use it. Remember, credit cards are tools and not free money so put a tight reign on your usage if you want your finances in tip top shape.
Not taking investment risks
If financial freedom is what you’re really after, saving for the rainy day is not enough. You have inflation to think about and sadly, most savings accounts can barely catch up with it.
In order to make money work for you and not the other way around, investing your money is the key. You need an investment that will give you higher returns than what savings accounts can offer. In other words, you need to take risks in order to reap in returns.
When making major investments, the trick is to always make calculated risks. Take your time by knowing and studying your options. If necessary, seek professional financial advice to help get you started. Soon enough, you’ll be able to get the hang of things and you’ll have money working double time for you.