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Millennials and Money

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There has been a troubling set of data circulating lately about how much money millennials have in the bank, and as a millennial myself it made me cringe a little. You can google it yourself if you wish, but the main point is that over half of us have under $1,000 in the bank. The implication is that the majority of us are scraping by paycheck to paycheck and may be just 2-4 weeks away from broke and homeless. That’s pretty depressing, and if that’s you or someone you know, you may want to consider trying to alter that trajectory. One unforeseen issue could begin a downward spiral to the poor house.

One look at the personal finance subreddit will give you a clue as to what the core of the issue might be. Our generation seems to have been inadequately prepared for adulthood. Scratch that. Make that woefully unprepared for adulthood. Basically most of us have no idea how money works and how to efficiently manage our own finances. It doesn’t have to be this way, though.

Step one is fairly simple. Stop sabotaging yourself. Think about it. Do you really think things through when you want to buy something? Do you think things through when you make major purchases and life decisions? Do you always consider the short term AND the long term financial consequences of your actions? If that 50% figure means anything then the answer is probably obvious.

Here are a few of the common mistakes I see:

1) Unwilling to downgrade lifestyle from when mom and dad were paying the tab.

I see this so often. Someone finally leaves the nest, but isn’t willing to live a more humble life for a couple of years before becoming more financially independent and established. You don’t need all the bells and whistles. You need to stay within your means.

2) Cigarettes and Utilities

If we use a nice conservative figure and say a moderate smoker has a $5 daily habit, that’s around $150 per month. For me, this $150 would cover my electric and gas most months. Would anyone willingly double their utility bills for no added benefit? I know smoking is on the decline, but you can replace this with any habit or vice. Overpriced coffee from the fancy drive thru place, anyone? You know the one.

3) Going out

If you have under $1k in the bank you have no business paying $5 for a beer or $7 for a cocktail. Get your life together. Figure out something fun to do that doesn’t cost so much, or get someone else to pick up the tab.

4) Debt and credit management skills lacking

It is good to establish your credit history. Having a credit card, car loan, or student loan payment can be a decent way to establish your credit. However if you aren’t careful you can soon find yourself buried. It’s important to spend with discipline and stay within your means. Loans carry interest and credit is extended by institutions looking to make a profit off of you. They won’t be the ones to tell you to slow down. They want you to max out, because in the long run they make more money that way.

5) Rampant consumerism and materialism

People often think of the wealthy as materialistic because of what they have, but really the distinction is just that they can afford to be as materialistic as they want without having to be concerned with the consequences. The truth is the rampant desire to have more material things and to consume is what’s keeping you broke and stressed. Your lack of money doesn’t make you less materialistic; it just limits the manifestation of your desire for more things. Ever meet someone without a pot to piss in, but they have a nice TV or drive a nice car? Don’t let that be you.

The truth is I could write a book about the things I see my peers doing wrong, and maybe I should. I could charge that same $5 they might otherwise spend on coffee or smokes. The difference is they’d actually get something for the money if my warnings were heeded. Sounds like a win-win to me.

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