Money Mistakes Millennials Are Making

Posted by Pekin Insurance on Jul 15, 2016

If you have graduated college, then hopefully you are at an adult job making more than that part-time job you worked in college. However, with this new income comes more bills and responsibility.

ThinkstockPhotos-472585302.jpg

In your 20s is when you truly begin setting yourself up for financial success. If you have graduated college, then hopefully you are at an adult job making more than that part-time job you worked in college. However, with this new income comes more bills and responsibility. You must now pay the present bills and save for the future, all while paying off loans. While it is by no means easy, no one expects you to wake up one day knowing exactly what to do. Instead, you should want to learn how to have a financially stable future because not taking care of your finances in your 20s leads to financial problems later in life.

  • Not having an emergency fund

Most college students do not have much of an emergency fund, and when tragedy strikes, they must use every penny they have on hand, reach out to parents, or learn to live without. Once you get into the real world, you need to become more self-sufficient and work on creating that emergency budget by putting away money monthly. The emergency fund should cover three months of expenses, but a good emergency fund should cover six months of expenses. This will take time to accrue, but sticking with it will help you in the future when an emergency arises.

  • Never checking their credit report

On average, if you ask a college student what their credit score is, they have no idea and probably have never checked it. With so many free sites out there, you can get an idea of your credit score, which allows you to know your chances of being approved for loans, credit cards, apartments, and more.

  • Not having a budget

More than just millennials are living without a budget, which can impact your financial success. When you don’t know where your money is going, you can end up spending more than you make and not saving anything. Creating a budget to see where your money is going opens your eyes to the reality of where you are spending money and how to reduce your expenses.

  • Forgetting about 401(k)

If you happen to end up at a company that has a 401(k) for employees, by not participating, you are putting your future retirement at risk. Having money taken out of your paycheck means you don’t have to see it and don’t have to worry about spending it. If your employer does not offer a 401(k), setting up an IRA or Roth IRA are other options. If your employer doesn’t have a 401(k), that just means that you have to look at other options.

  • Not investing early

Maybe the idea of children or retirement seems far off in the distance, but the years will fly by faster than you may think. Saving even a small amount out of college when you have to take on so many bills sets you up for success in the future. Once you get into the habit, it is easier to maintain and will help you down the road when you can contribute more to the fund.

  • Not paying off student debt

Sure, you’re only young once, but if you think that spending all your money on traveling instead of paying off your student loans is a good idea, then you are walking a thin line. The longer it takes you to pay off your loans, the more interest you’ll end up paying. An intellectual individual would look at the grace period after graduation as the time to begin setting aside money every month so they are prepared when the six months comes to an end and have a system in place.

  • Not having appropriate insurance coverage

Discussion about appropriate insurance coverage just doesn’t happen in college. Then you graduate and are thrown into the world uneducated about the coverage you could be missing. Making sure your auto and renters insurance has enough coverage for your needs is essential in case of a disaster.  

Financially, when you get out of college many individuals are so bogged down with loans, relocation fees, utilities, groceries, and more that they don’t think about saving their money. This can be hard when you are struggling to make ends meet financially, but you have to start somewhere. Saving even $5 a month can get you on the right track towards your financial future.  

  

Subscribe to our Blog