The older generation has received a lot of backlash from the millennials that it’s not tech savvy. While this might hold some truth, the millennials have a significant weakness. They do not know how to manage their finances. Even though this varies from one person to another, most of the millennials have demonstrated that they are poor financial managers.
With the challenging economic times, these younger generation doesn’t seem to care. They are spending their hard-earned cash on things they actually don’t need. From designer clothes, expensive electronics, and living in posh neighborhoods, millennials love the thrill that comes with spending.
What are the major financial mistakes this young generation is making? Are they justified? Let’s have a look at them how they can avoid them altogether.
Engaging in unnecessary expenses
Most young people justify their spendthrift culture by insisting that they want to live a better life. However, the cost of living this better life is way beyond their capability. Most of them are yet to get married and so do not have responsibilities.
Instead of saving part of their earnings for a rainy day, young people are just spending their earnings recklessly. One of the ways these young adults can use to minimize spending is by embracing a saving culture. This might involve opening a savings account with the many commercial banks available and securing their future.
Moreover, they need to cut on unnecessary expenses such as lavish holidays, affluent foods, and clothes. For those who do not have basic financial literacy, it’s important for them to contact a professional financial advisor who can guide them on the way forward.
Being over-reliant on their parents
It is not wrong to rely on one’s parents. Parents have the experience on how to manage cash. In addition, parents can be quite useful to young adults who are in their first job. They can offer them vital advice on how to manage their income and secure their future. However, the problem arises when these millennials tend to overly rely on their parents for every financial decision. Perhaps the reason behind this is the naive thinking among the millennials that their parents will always be there to assist them.
What these millennials need to know is that parental advice can only lay the necessary foundation for financial literacy. After that, they need to master the art of managing their finances. The world is radically changing. This means that the strategies their parents used to manage their income might not be necessarily viable in the modern world.
For them to find a lasting solution to this problem, they have to research more on the contemporary ways of saving and investing their money. There is a lot of information on the internet. Moreover, they can attend seminars and visit personal financial managers who can guide them.
Living beyond their means
This stands out as one of the biggest financial mistakes the millennials often make in the modern times. They want to impress their peers and everyone else and show them that they are living a high life. As a result, they are forced to spend all their income and at times, resort into borrowing in a bid to fund their expensive lifestyle.
With the rise of social media channels such as Instagram and Facebook, everyone wants to upload photos which indicate that he or she is doing well in life. Since their social media pages have to be filled with pictures of expensive gadgets and destinations, they have to dig more into their pockets to maintain such a costly lifestyle.
The solution to this problem is pretty simple; one needs to live a life which their income can allow them to live. There is no point in using all their income to fake it on social media.
The mentality that you only live once
This is one of the most famous terms used by the current generation. However, it is quite shocking to see that the term is only serving to ruin their future lives. Millennials are used to spending their cash in excessive partying, traveling, and other non-essential things.
In their minds, they justify this careless life by insisting that they deserve happiness. Thus, for those who are in formal employment, the payday is their defining moment. Immediately after getting their paychecks, the casual lifestyle begins until all the income gets exhausted.
This is the cycle these generation is undergoing, and they seem to be comfortable with it. When they take a break from work, all they do is spend and spend more. While it’s not wrong to have fun, one needs to mind the costs that come with having “fun”. Sometimes, too much of it can cause some serious damage to their finances. To avoid this mess, they need to plan for their income. After receiving their salaries, the first thing to think about is investing. This will generate future income streams. They can thus spend what is left after investing.
Failing to seek financial advice
One problem with the millennials is that they are know-it-alls. Often, they do not bother to listen to the advice of older people even on sensitive issues such as how to manage their finances. This can be disastrous especially when making major financial decisions such as buying a car. An excellent place for millennials to find the best information when buying a car is at www.car-buying-strategies.com.
However, it is important for them to have financial advisors who will give them the best tips on how to manage their hard-earned cash. Some of them think that keeping their money in banks or at home is a perfect strategy. However, this is not the case. Having their finances lie idle denies them an opportunity to earn any returns from their savings. What they need to do is find an expert in financial management who can assist them in investing their money in the right places.
Lack of experience
Even though most of the millennials feel they know everything, the sad reality is that they may not be as knowledgeable when it comes to finances. That is why they only think of spending their cash rather than investing it. Lack of experience in money matters is one of the reasons why they do not have the required confidence to invest. Thus, they miss a chance to grow their income.
Most millennials are practicing professions such as medicine, law, engineering, and hospitality among other careers, and they do not see the need for paying a personal investment professional. They forget that just as they have skills in their different fields, these other professionals also have expertise in the world of investment. They need to appreciate this fact and learn how to approach them and trust them with their money. That way, they will be given basic advice on the most viable investment opportunities which can grow their income streams.
Waiting for the perfect time to invest
Millennials are of the opinion that they need to have millions so that they can start investing. This is a false belief. They forget that what is needed is the right idea and a clear mindset. You do not even need to have the cash for you to start and run a successful business. With the right approach and the little savings, one has, they can get started.
It is the small ideas that grow into big enterprises. Even some of the biggest corporations started small. The most important thing is to focus and consistency in one’s plans and operations. Once they start an enterprise, they need to channel all their energies in the business and research on the best ways of growing it to make themselves a fortune.
The “I am still young mentality.”
This is what is killing many millennials. They think that they still have all the time in this world. Thus, they cannot initiate any tangible enterprises with the false belief that they have all the time on their side. They think that the best time to start serious things is when they are past the age 30. What they do not realize is that at this age, they will be having a lot of duties. Therefore, all their income will be going towards funding these responsibilities.
Furthermore, at this time, things such as family will demand a lot of their time. Consequently, they may not have enough time to concentrate on their ventures. The best time to start investing is when they are young. Immediately they start earning; they need to start putting their money in income-generating activities. By the time they hit thirty years, they will have accumulated a fortune and mastered the art of running a business.
Millennials should do away with the culture of spending everything they earn. Unnecessary expenses, living beyond their means and thinking they know everything are some of the things that are working against them. It’s important for this generation to learn the importance of planning for their future early.