Millennials differ in many ways from any other generation in recorded history. One critical way that they operate differently is in how they make financial decisions. As the first generation not to have classes like handling personal finances built into their education, and having all but doing away with paper money, Millennials are changing the way that Americans spend, save, and invest their money.
There are things that you can do to secure your financial future and others that can drive a nail through it. The problem for the Millennial crowd is that not all of them really understand the difference, and according to a credit union in Winnipeg , they are making critical financial mistakes that could potentially affect their resources for the future. The good news is that Millennials are just starting out in the financial world, and even if they make these four major financial mistakes, there is plenty of time to correct and turn them around.
They don’t take full advantage of what’s offered
It is a hard reality, but Millennials might not have the assurance of social security in their later years. In fact, many might lose their safety net if things don’t turn around. That means that for a Millennial, things like 401(k)s and retirement funds are more critical than ever before. Once considered an option just to have some extra money, it is important for the Millennial generation to understand that they will likely be paying for their retirement themselves, no matter how much they are paying into the system now.
Many who are just entering the workforce are not taking advantage of retirement options. In fact, statistics show that only about 30% of young workers sign up for retirement savings options. The participation is so low that many companies are automatically signing their employees up, with 84% of twenty-somethings being enrolled automatically. If you have the option, it is always a good idea to maximize pension or retirement savings accounts to secure your future.
Making earning the goal
Millennials have a new mindset when it comes to their occupation. Many have their eyes on the prize, but the prize isn’t to find something you love and do it for a lifetime. Many employees are going into industries purely because they will make a lot of money. What an older perspective knows is that industries come and go. If you want to be financially secure for a lifetime, you have to find something you love to do and stick with it.
When you choose something because of money, you have a tendency to jump around a lot, trying to find fulfillment. That means that you don’t ever really achieve success, either through your career path or your need for emotional fulfillment. If you want to ensure that you are set for your financial future, find what you love and create a life around it, instead of thinking you will work super hard for a couple of years for a big paycheck and then retire.
Not investing or saving early or enough
Those entering the workforce are having a hard enough time paying off their huge student loan debts, so the thought of putting money away seems almost laughable. That is leaving them without a safety net, spending outside their means, and landing them in a slew of trouble when they need money.
If you aren’t putting any money away for even a rainy day, you are setting yourself up for disaster. Just $20 a month is enough at least to start your savings. Incremental savings is what it is all about. It is never too early or too little to put some money away in your piggy bank for when you need it most.
When you do have a little amount, it is also a good idea to invest it. Not only will that make your money grow, but if you lock it up tight in an investment, then you’ve removed the temptation to spend it. Small investments are an excellent way to grow wealth.
Thinking about the quick buck
Millennials are always looking for the big payoff instead of earning a dollar’s wage. The internet and social media have taken the reality away from many young workers entering the workforce. Instead of working hard to achieve their goals and building a career, many bounce around looking for the new fad or get-rich-quick scheme. Again, it is much smarter to remember that slow and steady wins the race, instead of being the hare who falls asleep.
If you are a Millennial, the good news is that you have plenty of time to make the right financial decisions to grow wealth and to protect yourself for the future. If you correct these four mistakes, your outlook will be looking up.Google+