3 common mistakes millennials make with their money

Before you go, we thought you'd like these...
Before you go close icon

by Jiu-Jistu Finance

Millennials, like every other generation, have made their share of mistakes with money. While thinking about the thousands of conversations I've had about this subject, a few things seem to stick out like a sore thumb. First, getting a second or advanced degree can either be a huge success or an extreme set back if done wrong. Second, with freelancing and contractual work on the rise, these millennials need to know how to manage that money. Lastly, with 401K's being the norm for those who are employed, that means they need to make some investment decisions. These three issues can be a pivotal moment for your finances and your life. Don't be intimidated! These concepts are relatively simple to grasp.

Should I Get Another Degree? Maybe a Masters?
In my experience talking to people, getting a second bachelors degree is rarely a good decision. I'm not saying the education is worthless, I'm merely suggesting it's not worth the time and money. If you're really dead set on getting another degree, many times you can parlay your current one into a Masters program (even if they aren't related.) Depending on what you are looking to do, you may only be a couple prerequisites away from getting in. Don't trust the counselors to do your due diligence for you, higher education is a business.

Another common situation is in going for that advanced degree. After the financial collapse of 2008, Millennials enrolled in Masters programs, adding on another 20-30K onto their student loans. If the job demand for your advanced degree isn't hot, the ROI on this investment isn't going to be worth it. While many went to make themselves more marketable, some went so they don't look like a loser living in their moms basement with no job. Don't be that person! A cost effective way of optimizing your competitive edge is to search for professional certifications. A lot of professions value this even more than a Masters degree. Think about it, generally speaking, who would you rather hire? A Certified Financial Planner or someone who Mastered in Finance? Some of these certifications may require you to have a specific degree, this may be a better reason to pursue a Masters or second Bachelors.

ROI: Return on investment

What Do I Do With My Side Hustle Money?
With freelancing on contractual work on the rise, there is a bunch of untaxed and uninvested money lying around. First, consider opening a business account. If you're making more than a couple thousand dollars, this may be worth it. In the event of an IRS audit, they aren't going to like mixing your personal money with your business money. Remember, even though you may not see your side hustle as a full scale business, the tax authorities might – so be smart. Second, piling up your money in a savings account isn't doing anything for you. Sure, it may provide you with a sense of stability but you ARE leaving money on the table. Successful people would put that money to work. Some options are to invest in back in your business, deposit it into a tax deferred retirement account, or invest in another business. As far as tracking your figures, see my post "Know Your Numbers" for further information.

Do You Know What Your 401K Money Is Invested In?
I haven't done an official survey, but I'd bet 80% of people don't know what their 401K is invested in. Most people literally have no idea, this is troubling! Reach out to someone who knows what they are doing and ask them for help. Diversification, in connection with a successful mix of asset allocation will grow that account like never before. Also, take some personal responsibility and read a couple books on investing. Know one will ever care about your money more than you do. Jim Cramer's Real Money helped me really understand how the stock market works in conjunction with the economy.

Get ahead of the crowd and sure up these three common weaknesses. You won't regret it when you look at your situation in 10 years! Join my Facebook group here to continue this conversation!

The post 3 mistakes millennials make with their money appeared first on Jiu-Jitsu Finance.

RELATED: Personal finance books for everyone

14 PHOTOS
Personal finance books for everyone
See Gallery
Personal finance books for everyone
The Millionaire Next Door

"The Millionaire Next Door is my go to finance book. It’s a great book to get your thinking differently about your money, and find out how others have been successful building wealth." -Debt Discipline

"The Millionaire Next Door is an explanation of how average people with average incomes have been able to attain millionaire status. If you don't think you're ever going to become wealthy, this book is here to prove you wrong!" -Financial Fanny Pack

"This best-selling book by Thomas J. Stanley dispels misconceptions about the wealthy and reveals the common traits they share. It was an eye-opening book that helped me get a better vision on my journey toward financial freedom." -Marriage, Kids and Money 

SHOP NOW
I Will Teach You to be Rich
"Ramit is amazing at explaining boring and complicated personal finance topics in a conversational, fun, and easy to understand way. This book totally covers everything you need to do for healthy finances and dissects it into simple, actionable steps you can start on immediately. Recommended for anyone who wants to get their money matters in order!" -InvestmentZen
SHOP NOW
Your Money or Your Life
"This book offers unique perspectives on personal finance, including challenging the reader to consider how many hours were spent working towards items they've purchased, rather than just the price. If you're looking to transform your finances, this is a great resource." -Mystery Money Man
SHOP NOW
Scarcity: Why Having Too Little Means So Much
"This book explains how powerful scarcity can be, whether it’s a lack of time or money. It’s not exactly a personal finance book--it’s more about psychology and poverty, but it’s one of the most interesting “finance” books I’ve read." -The Wild Wong
SHOP NOW
The Simple Path to Wealth

"The Simple Path to Wealth by JL Collins. Most people over complicate personal finance. This is one of the easiest books I've read about getting your finances in order and investing in your future." -The Jenny Pincher 

SHOP NOW
Rich Dad Poor Dad
"Rich Dad Poor Dad focuses on stories from the author's life to reveal the differences in how the "rich" and the "poor" think about money. Kiyosaki's explanations are easy to follow and can be a good starting point for some basic financial ideas that anyone to use." -Financial Fanny Pack
SHOP NOW
The Top 10 Distinctions Between Millionaires and the Middle Class 
"The Top 10 Distinctions Between Millionaires and the Middle Class by Keith Cameron Smith is a quick, easy read that challenged my thoughts on making money and inspired me to stop chasing paychecks and pursue financial freedom! I wrote a post about it here." -Saving with Spunk
SHOP NOW
The Total Money Makeover

"This book has inspired millions to turn around their finances and get out of debt. The information is straightforward and understandable and would be a great gift for anyone from college student to the soon-to-be-retired." -Hope + Cents

"Dave Ramsey provides 7 easy to follow "baby steps" that lead people to financial prosperity. This book helped me to become debt free and create a plan to pay off my mortgage by age 35." -Marriage, Kids and Money 

SHOP NOW
The Richest Man in Babylon
"The Richest Man in Babylon's collection of short stories cuts out a lot of today's financial jargon in order to get back to the basics. This book offers simple and actionable strategies that can, and should, be used by financial experts, complete beginners, and everyone in between." -Financial Fanny Pack
SHOP NOW
Money Talks: When To Say Yes And How To Say No
"This book would make for a great gift, because it’s not your run-of-the-mill, dry finance book. It focuses on real-life experiences with practical solutions to get out of sticky money situations. I devoured this book and it’s my go-to recommendation whenever a friend or family member asks me for one." -Jessica Moorhouse
SHOP NOW
The Wealthy Barber Returns
"In The Wealthy Barber Returns, David Chilton mixes great financial advice and laugh out loud humor.  A few chapters are geared towards Canadian readers, but anyone interested in personal finance would find this a great read!" -Mystery Money Man
SHOP NOW
99 Minute Millionaire
"Scott Alan Turner pens this no-nonsense book focused on reducing your stress when it comes to investing and retirement. It opened my eyes to hidden broker fees and the simplicity of an index fund-based investment portfolio." -Marriage, Kids and Money 
SHOP NOW
Awaken the Giant Within
"If you're going to make any money or be successful in this world, you need to understand yourself and get clear on what you want.  There is no better book out there for accomplishing your goals." -Jiu-Jitsu Finance
SHOP NOW
HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

More from Jiu-Jitsu Finance
3 Very Different Ways To Reach Financial Independence
Millennials, Money, and the Future
Are You Teaching Your Kids Financial Independence?

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners