Millennials- they’re self-focused, defiant of the future, and spoiled.
I am entitled (another part of the millennial life) to say this since I am a millennial.
As a whole, millennials want what they want, when they want, and more than they should want. We have a well-earned bad rap.
I’m probably not your typical millennial (thank the Lord). Whether you’re a millennial, parent of one, or the boss of one, you’ve noticed the following four mistakes millennials are currently making that are hindering wealth building. If you’re a millennial, you need to know THESE ARE MISTAKES.
But there’s good news– I’m also giving you some tips on how to correct these mistakes so that you can live a life (before and during retirement) of secure wealth.
- Accepting debt as a part of life.
More so than any other group, millennials are drowning in debt. Much of that, of course, is student loan debt– which I’ve talked about here, and here. But it is NOT all student loans. The age group with the 2nd highest credit card balance…can you guess? Yep, millennials.
Why are millennials accepting debt as a way of life? Because we expect instant results and care very little for long term consequences.
HOW TO FIX IT:
This one isn’t an easy change. It literally requires a full change in one’s mentality. How does one change their mentality? You immerse yourself in where you want to be! Want to be debt free, follow Dave Ramsey and other debt free advocates for inspiration. Choose someone to keep you accountable– someone you’re willing to push your buttons and make sure you’re on track.
2. They’re willing to settle…for the best. And only the best.
Maybe it’s the “Everybody gets a trophy mentality,” but we all think we deserve high-end cars, luxury clothing, and first-class regular travel arrangements. I guess that lifestyle is okay if you can afford it– the vast majority of millennials can’t afford it. So they charge it. Millennials take 32% more vacations than other generations- we like to live our lives with luxury.
HOW TO FIX IT:
Know the difference between want and need. You do not need the best. You want the best. And more importantly, you can’t afford the best. At least not now. Much like #1, this requires a complete mind overhaul. When you surround yourself with high-rolling bling-obsessed, money-throwing people, you can’t help but get sucked in. Are you surrounding yourself with people that understand the value of 2nd hand, off-brand, clearance to save money? That doesn’t mean you have to look and live like a bum– but do it smart!
3. Savings? What’s that?
Overwhelmingly, millennials aren’t saving. They aren’t saving for retirement. But they aren’t saving- period. For anything. How can you save when you finance your life with debt?
HOW TO FIX IT:
Surprisingly, there is a portion of millennials that are kicking butt in the savings department. One of the hardest things to do is letting cash leave your hand, so never allow it to enter your hand. Here’s my strategy: most of us get paid via direct deposit, and banks allow you to split a portion of your paycheck. Even if it’s just 10%, have it directly split from your paycheck and directly flowed into a savings account. You won’t even miss it because you never had it! But here’s the kicker- don’t keep spending like you have…you’re going to have to cut back!
4. They aren’t investing.
There are tons of avenues to invest, and, yet, millennials aren’t taking advantage of them. Actually, nearly 80% of millennials aren’t investing.
HOW TO FIX IT:
Not everyone has to jump on the house flipping train like me. For some, that seems risky with a high overhead. There are safer ways to invest and earn more than minuscule amount a savings account is accruing for you. Mutual funds vary based on your comfort level and aren’t “all in” with just one stock- they’re a diversified form of investing. Within the last year, I started investing with mutual funds. Initially, I had a lot of ignorance about stocks and mutual funds (much like when I started house flipping), but my financial adviser has been tremendously patient with me! Just like with #3, you can have a small portion (percentage or dollar amount) taken out of your paycheck and deposited into your mutual funds. The best way to start saving AND investing is to do it with small amounts.
Regardless of where you’re at financially, sticking your head in the sand won’t help you in the future. Breaking the mold of millennials and systematically fixing mistakes you’re making will lead to financial stability in the future. And who doesn’t want that?!