Most millennials are literate and often think about their career progression but have a habit of splurging money on immediate desires. Few develop foresight to save for retirement or any other future needs. This sometimes lands them in a situation where they face an acute financial crunch. There are a few things that millennials should avoid doing to secure their future financially. Not making them will help them lead a stress-free life. Here are five financial mistakes that most millenials make.
Not having a budget
Most millennials fail to understand the simple logic behind having a budget and adhering to it. The idea behind a budget is to help you save money for goals you have in life. It also allows you to see where your money is going, analyse whether it is worth spending and whether you can manage without that expense. Without a budget, you have no idea how much you are spending on Sunday brunches and online shopping.
Splurging at will
Often, when millennials get an increment, they start splurging because they think they can afford expensive things now. And before they realize the desire gets unrealistic. Stop. An Amazon or Netflix subscription or an expensive pair of shoes, dining outside regularly may not be a big deal on their own but when seen as part of a list of avoidable expenditures over a longer period of time (say a year), that adds up to a big amount.
Not buying life insurance
Most don't think it's necessary to buy an insurance policy. Believing in the power of life is important for survival but thinking that you are invincible is stupid. Life insurance is a necessary instrument to protect your family should an unfortunate event occur.
Millennials are also known to tend towards making quick money. So they take the route of investing in the stock market and other risky instruments. It is prudent to first understand in detail the policies and products that you want to invest in, as they say, the devil's always hiding in the details.
No emergency fund
While buying health and insurance policies is wise, you should also create a separate emergency fund to go back to when there's an urgent need. Creating this fund will ensure you don't have to dig into your savings or alter your financial goals.