4 of the biggest mistakes millennials are making with their money, according to experts

Millennials are doing plenty of things right with their money — but their financial habits aren't perfect.

Nearly one-third are worse off than they thought they'd be 10 years ago, according to a recent INSIDER and Morning Consult survey. And it doesn't help that the Great Recession has adversely affected millennials' ability to accumulate wealth and that many are bearing the weight of student loan debt.

So what are they getting wrong about their money? We talked to the experts, who shared the biggest money mistakes millennials are making.


1. Taking a carefree approach that leads to playing catch-up later


"One huge mistake millennials make is taking a carefree approach to their money when they are young and then finding themselves having to fix bad habits or play catch up later on when they are peaking in their career or receiving an inheritance or a windfall of money," Ashley Dixon, CFP at Gen Y Planning, told Business Insider. 


"Millennials tend to procrastinate financially," Yoni Dayan, chief editor of Money Under 30, told Business Insider. When they're starting out in their careers and don't have much money available, they tend to think waiting a few years when they're older and have a higher earning potential would make saving less painful, he said. 


"Unfortunately, it's really difficult to break this mentality," Dayan said. "Because the logic will be true at almost any stage in a person's career. It will always be easier to save later. Millennials need to start saving yesterday."


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The earlier you start, the easier it will be to form good financial habits — even stashing away the $5 you'd spend at Starbucks can help, he said: "You won't retire off the savings, but the habits you form will help shape you into a financially healthy adult."


Read more: 4 things millennials are doing right with their money


2. Creating a lifestyle focused on spending, not saving


Spending all your income before saving any of it can create a snowball effect, Dixon said.


"If you buy or rent the house, the car, the clothes, and the food based on your entire income and there is nothing left over to save for your retirement, an emergency, or a vacation, you will be forever searching for more money or have to be digging yourself out of debt," she said.


She advised putting 20% of your income toward savings, whether it be a 401(k), emergency savings, or other financial goals, before determining what you can spend on those things.


Spending below one's means is a common habit among millionaires, who often share the key trait of frugality, according to researcher Sarah Stanley Fallaw. William D. Danko, co-author of the best-seller "The Millionaire Next Door," told the Washington Post that saving is the first of three ways one can build wealth, regardless of their financial situation or education. Like Dixon, he recommended saving 20% of your income.


RELATED: Take a look at these easy money habits to help build your wealth: 

5 easy money habits to build wealth
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5 easy money habits to build wealth

1. Put your money on autopilot

Automate your finances to avoid missed payments and save more money without thinking about it. 

2. Remember your future self

Contribute as much as possible to retirement or at least enough to get your full employer match. Increase your contributions each year and invest spare chance with an app like Acorns

3. Use free money wisely 

Put surprise cash, like your tax refund, bonus or birthday money, into your savings or investment accounts. 

4. Track your dollars 

Use an app like Mint to see where your money is going and help you stick to your budget. 

5. Make 'rich' friends

Hanging out with high achievers can help you adopt their money habits.



3. Not paying attention to their credit


"Millennials are simply not aware or interested in credit," Dayan said.


He added: "Credit is a double-edged sword – having good credit can make loans and mortgages much cheaper; bad credit can sink you. Millennials need to start caring more about their credit score. Now is the time to start massaging it, so that when they're ready to make a big purchase they'll be reaping the rewards."



Few millennials reach excellent credit and 36% don't even know their credit score, according to a Money Under 30 survey. And a recent survey by Business Insider and Morning Consult revealed that only a little more than a quarter of millennials have a credit score of 700 or higher.


A good credit score can help determine whether you get approved for a mortgage, auto loan, or new credit card, reported Business Insider's Tanza Loudenback. It also influences the terms of a loan, including the interest rate.


Read more: Nearly one-third of millennials are worse off than they thought they'd be 10 years ago


4. Not preparing for emergency expenses


When Money Under 30 asked millennials how they would pay for an unexpected expense of just $500, almost 20% responded saying they would need to ask for help from friends or family. That's nearly three times more likely than other Americans, Dayan said.


That's not surprising, considering more than half of American 20-somethings still count on money from their parents to pay their bills, according to the Country Financial Security Index.


About 37% receive money on a monthly basis, and more than half (59%) receive money a couple times a year. Many are putting this money toward basic needs, both small and significant, like cell phones, groceries and gas, health insurance, and rent.


"Millennials can combat being unprepared for out-of-the-blue or unforeseen expenses by creating an emergency fund," Dayan said. "This may seem daunting but by setting aside a small amount each month, millennials can be confident in their financial health and ability to address unpredicted expenses."


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