7 financial habits you need to break right now
Millennial Money Guide was created to help millennials be smarter with their money. When talking to my friends about money I sense a common theme among most. I kind of got the feeling that many millennials, not just my friends, don't really know how to be fiscally smart! So check out the following 7 financial habits that you may need to break.
Not Planning For Retirement
Not contributing to your own retirement: One of the biggest mistakes you can make is not contributing to your retirement accounts. It's not difficult to think that you should be saving for more short term goals like getting a nice sports car and that retirement is too far away. However, you can even sock away some savings in a Roth IRA if you make minimum wage while in graduate school. When you get your first job right out of college, begin saving for retirement and your future self will thank you. You should become to discipline your budget so that a portion of your paycheck goes to your retirement account. The key to building wealth and planning for retirement is TIME. You can't buy time, so I would highly recommend that you start today if you haven't already.
Buying A Car You Can't Afford
Buying a car that is too expensive for you. I'm sure BMW would want millennials to think that you should have the latest of greatest 5 series. That new-car smell can easily run you over 40K in DEBT. In fact, living in Washington, DC public transportation makes it so I don't even need a car (Even though I still have one, I love my car!). Another thing to consider is that new cars depreciate in value rather quickly and they say you lose money as you drive that new car off the lot. Be smart with your money and purchase the right car for your wallet.
No Emergency Fund?
Not having an emergency fund. Often, people find excuses as to why they don't have an emergency fund. Common excuses being that the money can be used for your retirement or to pay bills. I would suggest that after all basic needs are meant you should start saving for an emergency fund which is typically 6 month living expenses. You're likely to get more DEBT if you don't have an emergency fund readily available and liquid.
Buying Stuff On Credit
If you don't have any debt in your 20's, be thankful. It's very common to buy things on credit cards and just pay the monthly minimum but likely you are paying high interest on those amounts. Living on your own credit cards will lead you to live pay-check to paycheck, which can be an extremely tough habit to break once it's formed. This practice can ruin your credit score at the same time.
Not Having Goals
Neglecting to establish financial goals. If you never consider what you'd like to accomplish in five or ten years, it is likely that you won't achieve anything by the end of that period. If your goals are established and financial goals are set in your 20s it can definitely help you plan better and concentrate on methods to achieve your goals. A good amount of stress can arise from not establishing money goals as you tend to work harder to make any kind of advancement towards certain large purchases you may buy later in life such as a home.
Always Comparing Yourself To Others
Keeping up with the Joneses (particularly if they're your parents): The pressure to fit in can function as subconscious motivation behind lots of poor fiscal choices, but the catastrophe of the unproductive mindset is clear when you can always find someone who has more than you do. Occasionally that pressure can build by believing that you are able to have everything they have and comparing your lifestyle to your own parents' lifestyle or friends with higher salaries. If you don't understand the wealth of your parents (and others) it is because they have had many years to amass their riches and if you try to keep up with them you could set unrealistic goals, which might result in making high-risk fiscal choices.
Not Paying Yourself First
Not beginning the act of paying yourself. It's a mistake to not pay yourself first, even should you have a high paying profession. You essentially prioritize saving cash by paying yourself first which is how you start to develop wealth. Ideally this money will be invested. Individuals that don't learn to save generally spend all their cash having fun and paying bills. Ultimately, they find there's nothing left to save.
Being in your 20s and dealing with money is tricky because personal finance is not taught in the education system. By making smart financial choices you will begin to take responsibility for your own financial success and following this website you can continue to learn more about money.
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