5 millennial money mistakes
Unfortunately we all make mistakes and without sounding like a Tony Robbins ‘Unleash the power within’ seminar, it’s how we learn from it and use it as a learning curve for future growth (if you are scratching your head on who this Tony guy is, https://www.tonyrobbins.com/).
I often wish I had a case study of millennial money mistakes; as in our world, a lot of us ask the same questions, are stuck in the same economic situation and continually get the same result. We have so much running through our minds that money management is often at the bottom of the pile. However, if you peel back the layers, money is the crux of most of our short-term problems.
We often think about our next holiday, if we will become millionaires before 30 - consequentially asking ourselves why we are not paid more, how to enforce a restraining order from spending on Asos and why our student loans are still not paid off after all these years; mixed with pondering thoughts of why that girl/guy you matched on Tinder last week still hasn’t messaged you back. Pessimistic Patty would say millennials are doomed, however, optimistic Oliver would take a more opportunistic stance on the matter. I like Oliver. Small changes can produce rippling effects, whilst learning from mistakes creates a better life for you in the present and the future.
Before we begin, let me hit you with a Tony Robbins quote:
“As the saying goes, if what you learn leads to knowledge, you become a fool; but if what you learn leads to action, you can become wealthy.”
5 MILLENNIAL MONEY MISTAKES
- “Mate, I’m gonna move back home for a few months to save a bit of cash” - FYI, I have ZERO issues with this. Infact, more UK millennials are still living at home post uni than previous generations. If you can do it, then why not use the this economically beneficial situation to your advantage. However, the disposable income obtained from not paying rent is often an excuse to going out with friends and partying like it’s 1999. The key here is to ensure your direct debit is setup on the day you get paid to save a proportion of this extra cash, whilst also taking a percentage of this for your fun fund. All work and no play is a poor balance, whilst you will just end up popping bottles at your local nightclub, leaving your wallet feeling even lighter than before. Tracking your budget and set DAILY financial goals which are both scalable and sustainable.
- “This year I’m gonna save so much cash and buy a house” - Love the optimism and the fact that you are looking to get yourself on the oh so desirable UK property ladder. Setting a yearly saving goal is great, however, creating a systematic plan for DAILY saving is crucial. A daily savings goal sounds boring and tedious, however, it creates accountability whilst ensures your focus doesn’t slip. 20p a day is around £6 a month which is £72 a year…use this is a benchmark to change the way you think about money. Saving £1 a day would provide you with 5x this amount of savings! The goal of getting a deposit together for your first house becomes a lot less overwhelming with the above approach. Saving is great, however, ensuring the cash is working for you whilst you sleep is where most people, let alone millennials, get stuck. Don’t forget to scope out your options - For example, checkout your suitability for the lifetime ISA before it’s release in April this year and get planning. Micro-saving combined with micro-investing can have seriously good benefits for both your mindset and bank balance.
- “Honestly, I don’t know how I can save - I just about keep my head above water every month” - I get it and feel for you. The pain is real and the struggle is even realer. However, one way to start saving money is by trimming the fat from your day to day. Saving doesn’t just mean taking a proportion of your monthly disposable income and putting it under your mattress. It can mean ensuring you are paying the correct amount of council tax, switching to a cheaper energy provider, understanding what debts you have and shifting it to another cost-efficient credit card, cooking your lunch every day for work rather than spending it on Leon, cancelling the gym membership that you use once a month just because that hot girl trains there and joining a running club…you get my drift. Trim the financial fat otherwise continue to feel like a doormat.
- “Girls, we need a big night out, I really need it” - Uh oh. Going out with your friends is what we all love doing and being the scrooge of your friendship group is no fun. There are plenty of meme’s for this, however, “….that moment when you check your bank balance the morning after that night out.” The key for this is to not shy away form nights out, but to cap your spend prior to the night out. Set aside your night’s spend and why not get yourself a pre-paid bank card. I use my Monzo bank card when I go on a night out. I upload it with the cash I need and the app simultaneously tracks my spending real-time. The next day, I can see where and what I was spent my pennies on!
- “Apps for money making and saving…bore me later” - Apps can help you save whilst also ensure you understand how to make your cash go further. The power of micro-investing is key for millennials and tech is and will be a springboard for this movement. Apps such as Money-box can help round your daily purchases to the nearest pound and invest the excess cash for you on your behalf. As stated above, the foundation for all of the above is to track your spending. Apps like money dashboard and moneyhub are interesting alternatives to the excel spreadsheet in the digital age we live in. Becoming a millionaire overnight is simply not achievable, however, we all need to start somewhere.
Many would think understanding your pension and contributing towards this pot of funds is one of the classic millennial mishaps. However, that would require a dedicated segment in itself! For the moment, don’t forget your benchmark of 20p a day is around £6 a month which is £72 a year.