There are five common mistakes millennials make when it comes to handling finances.
Thankfully, for every mistake there is a simple solution. And, by avoiding these common mishaps, you will be able to get ahead financially without giving up the things you love.
Time is on your side, millennials. Here are just a few of the ways you can get ahead and stay ahead this financial year.
MISTAKE 1: “Savings? What savings?”
One in five millennials don’t have a savings account, according to the Bank of America Better Money Habits poll. And, those of you who do have savings, don’t have nearly enough.
From this information, it’s a safe to assume most millennials haven’t even considered making a few voluntary contributions to superannuation accounts. In Australia, millennials have been shown to be better savers than Generation X, according to a survey by Suncorp, but there is still glaring room for improvement.
The cost of living is only going to increase over time and, by the time millennials retire, the age pension alone will not be enough to live off. By overlooking saving and superannuation, you’re making a mistake for both the short and long-term.
SOLUTION: Do a budget, open a high-interest savings account and arrange for just a small part of your pay to go into this account automatically. Discuss with your employer the possibility of increasing the percentage of your pay that goes into your superannuation account each month.
Mamamia millennials discuss buying a house, or coming to terms with not being able to buy a house. Article continues after this video.
MISTAKE 2: “Credit, please.”
Credit cards aren’t the devil (despite the number of times they’ve been referred to as just that). It’s how you use them that can make or break your finances.
Credit cards are not ‘free money’. Large purchases should be made with money you’ve saved, and not using credit cards that attract high-interest rates.
SOLUTION: Ethan Block, founder of online financial services company Digit told the Sydney Morning Herald that credit cards should not be used for short-term purchases. He suggests opting for a card that has a low limit of around $500 and setting up auto-pay to keep on top of it.