In my first blog post, “Who is Generation Me?,” I mentioned that as millennials, we are confident. Part of us being confident with ourselves is us being confident with our money. Bank of America found in its 2015 report that “84 percent of millennials are confident in their ability to manage their finances.” Does this high confidence percentile indicate that we are managing our finances correctly as a generation? The answer is not at all. Although 84 percent reported confidence in their money-managing, Bank of America also released that, “41 percent are chronically stressed about money.” You would think that if you had confidence in your money-managing, that you would not have to be constantly stressed about money.
What are we doing wrong?
1. Not putting enough money into savings. Millennials are notorious for living from paycheck to paycheck. As shown in the image below, the majority of millennials have less than $1000 in their bank accounts at any given moment.
2. Student loans. Student loans are no joke. As I love to explain, we were raised with a ‘can- do’ mentality (whether we put that mentality to work or not). This ‘can-do’ mentality can be a downfall when it comes to student loans because it causes us to not look at the big picture. We look at what job we can get from attending a certain university, with a lack of concern for the bills that have to be paid following graduation and opportunity costs. This is not to discourage higher education, as it is extremely important. The point of this is that sometimes other options have to be examined. For example, if you wish to attain your Masters degree, it may be beneficial to find and work for a company who will pay for you to get your Master’s so your opportunity costs are lessened.
3. Viewing credit cards as monopoly money. Credit cards are for building credit and are for large purchases in able to show your bank that your good for the money. In short, they are not for buying a Starbuck’s Caramel Macchiato or other mindless purchases. Investopedia author, Mark P. Cussen, states that:
“half of millennials have to use a credit card to pay for basic daily necessities such as food and utilities.”
The reason this type of frivolous spending occurs is because millennials are always trying to play catch up with each other. We can’t help it, it is in our competitive nature. For the most part millennials wish to be in the same standing as their friends, whether it be related to a car, piece of technology, or even a coffee.
I summarized these findings, and even conducted a few interviews with millennials in the following video:
Closing advice to all millennials: Do not get caught up. Buy what you can afford with the money that you have, not the money you will (most likely) have next month. Let’s put away monopoly for awhile, you’ve outgrown it.
Featured Image Source: usnews.com