Update: This article was last updated on 15th Feb 2019 to reflect the accuracy and up-to-date information on the page.
The millennials are a generation of creativity, innovation, and self-belief people. They are willing to sweat it and risk it if the results mean success. They have changed how the world looks and how the world behaves.
However, with this entrepreneurial mindset of theirs, comes the tendency to rush into decisions.
While being quick on their feet has helped many make their fortune, for most, it has been disastrous. Critical decisions, especially the financial ones, are not to be made in a rush.
The key factors like risks recovery, potential financial repercussions, market status, and budget flow should be considered before a decision is made. However, most millennials tend to throw these factors out of the nearest window.
Having a comprehensive understanding of how money grows is a must if you want to achieve success, both financially as well as personally. Don’t be one of those guys who could have made it big but didn’t because you could not manage your money. Be the guy who did make it big.
Here we discuss some of the key mistakes millennials tend to make when making financial decisions. Read them thoroughly, understand them and make sure you do not commit them.
1. Not Building an Emergency Fund
A lot of the current generation believes in “living in the moment” and do not focus on the future. Although it seems to be the right thing to do, not planning for the future can prove to be disastrous.
Any financial calamity can occur suddenly leading to a loss of assets or revenue. At such a time, if you do not have some additional deposit saved, you can find yourself in a pickle.
Hence, you should always keep an account separate for emergencies. As a result, even if there is a problem with your finances, you can use that deposit to sustain. Generally, it is recommended to create an emergency fund that can cover 6 to 9 months of your expenditure.
2. Not Having a Budget
The revenue you earn every month is very clear to you. However, the expenditures are not. There can be any unforeseen expenses that may befall you any day.
It can be any event like a rock concert, a commodity that you find attractive or useful, or there is an essential task such as repairing and maintenance that you did not expect. All these can be a dent in your earnings.
Hence, you should plan for the month at the starting itself and keep some amount for the unforeseen expenditures.
3. Neglecting Cash Flow
It is essential to keep track of the cash flow. It means that you should be aware of how much revenue is coming in and going out. It is a normal tendency for individuals to increase their expenses with the increase in the earnings.
However, sometimes you lose track of the expenses and spend on expensive, yet worthless products which are not in accordance with the earnings.
4. Spending More Than the Income
You should never spend more than you earn. However, if that happens, you start digging into your savings and deplete it slowly.
Hence, you should always monitor your earnings and see to it that the expenditure does not exceed it.
5. Getting Hung Up on Small Things
What it means is that you should be not get caught up in saving the expenses on small stuff but miss out on huge savings in other aspects. For instance, if you decide to quit coffee, you could save a hundred dollars in a month.
However, at the same time, you buy something expensive that costs five hundred dollars, i.e., five months of saving on coffee.
Are you taking good care of your money? Anything to add to the list? Please share in comments section.
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