Millennial Money Management Mistakes
Did you know that small changes in your money actions can change the game for your money future?
Below is a big list of Millennial money management mistakes you could be making.
Don’t let these stop you from having the money life of your dreams.
They are broken down into categories so you can deal with one aspect at a time.
Millennial Money Management Mistakes In Budgeting
1. No Budget- If you are not managing your money how can you get anywhere with it? Don’t keep living in confusion and “ I don’t know”, or ignoring it until it fixes itself. Let me tell you right now, it won’t! You have to put in what you want to get out of it. If you want your best money future take control of it today. (Grab a money action plan or work with me 1-to-1 to start your budget today)
2. Not Preparing Your Money Ahead of Time- Your budget will most likely change every month. That’s why monthly set in the stone budgets doesn’t work for the average person. Prepare for expenses ahead of time. (Grab the money calendar worksheet to plan your year with money so you can know exactly what you will be spending each month)
3. Living Paycheck to Paycheck- you will stay in a money hole and a money loop until you choose to get out of it! Why keep living in fear and desperation every month when you are only a few steps away from freedom. ( Take those first 5 steps with The Money Shift Action Plan)
4. Financial Illiteracy- You are not fully sure how money works, so you just follow what looks right or just give up on money in general. You need an optimized money plan that allows you to reach your money and life goals. ( Let’s talk today to make sure your budget is aligned with your goals. )
5. No Money Goals- Money goals help you live your life to it’s fullest potential and gives a plan to your money ahead of time. Without them, you can be or become very aimless with your money. That gives you more reason to spend it carelessly. When you add goals to your money life and a “Why” your potential to succeed 10x’s.
6.Paying Yourself Last- If you only save or invest when you have the money you will never get around to it. Instead, save and invest first and then create a budget to use the rest. Aim for 5% to 10% and then increase from there.
7. Not Using Budget Automations- Budgeting is a lot of moving parts, use automation to build good money habits in the background. Set up Autopay for your bills, debt, savings, and investments.
8. Never Reviewing Your Money- Use your bank’s app or Mint app to stay on top of your money weekly and/or daily if needed. This review catches things like overspending, incorrect automation, overpaid or unpaid bills, and if the app is awesome enough your credit score and net worth. This regular review will keep you in control of your money.
Millennial Money Management Mistakes In Saving:
1.No Emergency Fund- Emergencies will happen, things will go wrong that is a given in this life. Prepare for it with a 1 month, 3 months, 6 months, or year emergency fund based on where you are in life. Your fund should be able to cover medical emergencies, travel emergencies, home emergencies, car emergencies, and layoffs. Start small, but keep building it till you are set.
2. No Sink Funds- Remember that budgeting calendar I mention above? This is where sink funds come in to save the day. They turn those budget variations into monthly bills that keep you sane all throughout the year. This a true game-changer for your money. Take the differences in your money for the whole year and divide that by 12. Add that as an extra monthly bill and have it pay for budget changes. (My favorite place to have sink funds are with Capital One Bank, you can get up 25 savings accounts for FREE!)
3. No Savings- I know savings can be hard when you have bills and your needs to deal with. You must find a way so that you can stop letting money control your life. If that means getting a side hustle so you can build up your savings do it! If it means pulling back on some of your spending, make it happen. You are saving yourself from financial despair when you save, and that is so worth the hassle.
Millennial Money Management Mistakes In Spending:
1. Spending More Than 30% On Housing- Housing is the most expensive budget category if it’s more than 30% of your pay you will be drowning in money problems if something else goes wrong. Your options are to increase your income, find a more budget-friendly dwelling, or cash flow your rent. Choose what’s best for you right now and then plan for what you want in the future.
2. No Spending Limits- I know restrictions suck but think of them as guidelines to save you from yourself. The best way to do this is to trick yourself into not seeing money with automation and different bank accounts. Have your bills and sink funds in one account, your emergency fund in one account, and everything else in one account. Have your paycheck automatically distribute to each account. Spend money in your everything else account freely, but when it’s gone and it’s gone.
3. Overpaying for Bills/ Forgetting Subscriptions – Check your rates for all bills every year especially on things like insurance, cell phones, and entertainment. Check your accounts fro subscriptions you are no longer using or make sure you are using your Spotify, Netflix, and food subscriptions. If you don’t use them, remove the. Make sure you are optimizing your pennies instead of making billion-dollar companies richer.
4. Overspending- Your lifestyle has got to fit your money. I know it’s hard out there. Marketing follows you around 24/7, social media displays highlight reels, the people around you seem like they are living their best life. But Honey, Your best life is within your budget and that is a promise! If you want a bigger and “better” lifestyle, you gotta make bigger and better money. Period.
Millennial Money Management Mistakes In Credit:
1. Maxing Out Credit Cards- This is a symptom of overspending. Your credit affects way too much of your money life to mess with it and maxing out your cards is a death sentence. If you are at the max tackle that credit card debt right now. Use The Money Mastery Roadmap to tackle your credit today.
2. Going to Collections- Do everything in your power to not let this happen. Even if you can’t pay the full bill you can set up a payment plan or keep asking for an extension. Your bill providers will work with them as long as you keep them informed and aware. Be vigilant and letting them know what’s going on and what you can afford. A bill collection on your credit is a death wish to your credit until it is paid in full, don’t let it get that far.
3. Opening Up Multiple Credit Accounts– 2 new credit items a year should be your limit. Anything else will have you looking desperate to lenders and drop your credit score 30-50 points.
4. Not Checking Your Credit Regularly- Do not get surprised the next time you apply for credit. Sign up for Credit Karma and turn on email notifications so they can tell you about changes to your credit and download your bank’s app to see your credit score every time you open it. Download your credit report for free 4 times a year at freecreditreport.com. Put these tasks on your calendar and set an alert.
Millennial Money Management Mistakes In Investing:
1. Ignoring Employee Matching- Don’t leave free money on the table. Most 401k programs are crap, but if an employer is matching match them up to their max just to have the free money. Your future self will thank you.
2. Investing Late- Have you seen that investing infographic that compares people who start investing in their early 20’s vs those who start investing in their 30s and it’s a million-dollar difference at age 65 even if the early investor stops investing after 30! Be the early investor, even if it’s a $100 a month, you will reap the benefits. You know I have to also tell you to be in the proper place for investing which is money shifted, budget mastered, and debt slayed.
3. Never Investing- Many people don’t invest because it is seen as gambling and only for rich people. Investing is using your money and expecting a return. It only becomes gambling when you get too risky or the economy takes a nosedive. Even then when things calm back down you still can have a return. Also, you don’t need a lot of money for investing. Robinhood has a $0 minimum to get started as well as Betterment which a perfect place for your Roth IRA.
Millennial Money Management Mistakes In Money Mindset/Personal:
1. Not Asking For Help- If you need help with navigating money run- Don’t Walk- towards help. Money is a huge part of everyone’s life- do not suffer in silence. If you need 1-to1 guidance and motivation get a money coach to help you through your money journey. You deserve to have the money life of your dreams.
2. Never Saying No- If you have a hard time saying no to friends and family you will never be able to get ahead so that you can truly help them and yourself. If you have the money and it doesn’t put you in ant type of bind, you can help in any way you can.[ Although you should probably teach them how to fish instead of just giving them the fish.] If you don’t have it, practicing the word no is all you need. You will learn how unhealthy your relationship is with that friend or family member from their reaction to no. Watch, learn, and take action from there.
3. Negative and False Money Stories- We all have them. Money doesn’t grow on trees. Being rich is bad. You have to work hard for money. Figure out how true these statements are by boosting your financial literacy and getting around people with wealth. When you see that you thoughts are negative and statements are untrue, you will think and do differently.
4. YOLO- You only live once will have you missing out on real life. Flip that statement on its head and realize you only are young once and this is the best time to get your money right and invest for your future. Money management can provide freedom of your wildest dreams if you follow through and work the plan. Last point: Debt is enslavement with no chains but a locked door. Bigger and better is behind that door.
5. FOMO- Fear of missing out will leave you broke. If this is a constant battle for you you need to get to the root of the issue before your it destroys your money future. Practice missing out on smaller things like brunch with friends to build up your tolerance. Once you see you didn’t die or actually miss anything you can start letting the bigger things slide, especially if they are not in your budget or screw up your money goals.
My Last Two Cents:
You will be handling and managing money for the rest of your life take the time to do it right now, so you can reap the rewards of money well managed.
If you need any help or need clarification on a point above reach out to me on Instagram @ReEducatedTwenties.
Good luck and remember the little steps always count!