The worst money mistakes millennials should avoid
Millennials are a distinctive bunch, and we mean it in a good way. Their approach to life and everything in it is a 180-degrees from their predecessors. The regimented upbringing seen in so many Southeast Asian countries have fallen, and from its ashes a new generation has sprung. One that lives, breathes and beats to the heart of the Internet and all its digital escapades.
Advertisements and popups online tend to entice its viewers with many products, services and even loan opportunities. Some of these ads are incredibly tempting and lead these millennials to spend more than they can afford. Before you let go of your hard-earned cash on something you may not need, perhaps you should consider these pointers.
Here are our top points on mistakes can be avoided when it comes to millennials and money management:
Boot Out Your Expensive Rituals
Do not use shopping as a means to make yourself happier or to pamper yourself for the big accomplishment you just achieved.
All you’re doing to yourself and your bank account is ridding it of significant dollars, especially if this instance occurs every other week.
So yes, it’s time to practice delayed gratification and hold on to your wallet (mobile or physical!) for a moment. Saddle your heart onto something else, like a good read or a movie flick.
Chances are that you’ll outgrow that splurge rush, and get back to your life’s norms. One that involves a healthy dose of money that stays with you.
Do Not Skimp on Quality
This is an interesting one. We're actually asking you to spend more, but spend wisely. Don't be penny wise pound foolish. There is no point in buying something cheap and low in quality, then having to buy another one just a month later. Instead, buy something of good quality within a reasonable price range that will last much longer, especially on items like mattresses, electrical appliances and laptops.
Not Taking Charge of Your Debts
You could have started off innocently enough – with an education loan. Then perhaps you might have taken on a personal loan. Then there’s your ever-present credit card debt.
That's how compounding interest gets to you and suddenly, you're in a mountain of debt and you're not sure what to do. The first thing you should be addressing while you're young is paying off debts rather than racking them up. If you do not start tamping down on your personal debt, it’s going to bite you where it hurts, especially when the need arises to purchase an apartment or grow your investment garden.
Overstepping On Your Budget Boundaries
A budget helps you stay on track with your expenditures. Split your paycheck into two – one to pay off fixed expenses and one to access for everyday expenses like food and necessities. This should be separate from your savings accont. You would be surprised how this simple step could take you a long way.
If you need external help with budgeting, two apps that are great to help on with your budget and monetary moves are Seedly, which sells itself as your personal finance assistant, and Pocket Expense that tracks both your accounts, bills and yes, budgets too.
Overspending and Lifestyle Inflation
Your first salary into your account was a treasured moment. The same sum also showed you how more money can make you spend higher. Keep yourself away from the trappings of lifestyle inflation, or your credit balances will hit the roof way before you actually realize it. Live within and if possible, below your means.
Not Prepared for the Worst Scenario
Life can suddenly hit you with a barrage of bad circumstances, and it’s always good to be financially prepared for any kind of unexpected challenge. Set aside a sum of funds that is sizeable (an average of 6 folds of your monthly salary) to tide through a bad financial spell.
Not Giving Investment a Go
Investment has been touted as the best way to build your wealth and get rich. Warren Buffett himself recommends to start investing as soon as you can by digging into low-cost index funds. With the number of robo-advisers flourishing today, this is surely not tough feat.
Retirement Planning Left Unchecked
A Legg Mason Global Asset Management Survey indicated that 46% of Singaporean millennials had early retirement as part of their top investment goals. 35% of the individuals in that range were willing to work longer than usual to save up for their retirement. But what’s the best way to ensure that your retirement target is met?
It’s all about starting off early and harnessing the power of compounding interest on your retirement plans.