It’s true that millennials are the most digitally connected generation ever. The internet provides endless information at their fingertips on topics like personal finance and building wealth. However, sifting through the sheer volume of advice online can also be overwhelming and confusing.
As a result, many millennials still make critical money mistakes that hamper their financial futures. Though armed with more knowledge than previous generations, practical wisdom is still lacking.
Below are 5 common pitfalls millennials fall into, and tips to avoid them:
Excessive Student Loan Debt
Pursuing higher education is important, but examine if the long-term income potential justifies massive debt. Before taking on loans, realistically consider future monthly payments against expected earnings in your career field.
Beware of keeping up online appearances
Social media pressure tempts some millennials to overspend just to flaunt luxury on Instagram and other sites. But do you really need the $2,000 smartphone or lavish lifestyle for the ‘gram? Use social media meaningfully to connect with real friends, not for superficial showboating.
Delaying saving until ‘stability’
Some millennials wait too long to start saving, wanting to feel ‘secure’ first. But early compounding interest is key. So put aside money whenever possible, even small amounts. Take advantage of extra income from side jobs or windfalls to build savings.
Too many credit cards
Easy online applications entice millennials to sign up for multiple cards. But this spirals into perpetual debt. Stick to one or two good cards and use debit or cash to avoid overspending. Don’t keep cards on you at all times.
Buying expensive vehicles
Cars depreciate rapidly and strain budgets. Only buy what you genuinely need and can realistically afford. Consider paying mostly cash instead of large loans. Don’t even test drive models out of your price range to avoid temptation.
Millennials have financial knowledge, but still stumble. Avoiding common pitfalls like overspending and debt, starting to save early, and living within realistic means will lead to financial health and stability.