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Millennial’s often waste money every day. They lack the art of mindfulness and self-discipline to manage money effectively. Money gets spent on unnecessary purchases such as branded clothes and expensive electronic gadgets that lose value with time. Living within your means is something that is not difficult yet requires changes on your part. Let’s take a close look at five mistakes millennial’s make managing thier money.

Spending more than you Earn

Millennial often pay more than they earn and find themselves consistently at the verge of debt accumulation. Debt can be useful and very useful if appropriately managed, but millennial’s often lack the skills to do so.  They usually get deluded with the thought of not buying what you want, when you want and often spend their hard-earned earning on things that they can’t afford.

Keeping track of what you make and what you spend is not a difficult task. One must always add up expenses including money spent on food, clothing, shelter and any other entertainment expenses and if this amount exceeds what you make each month, then it may be time for you to start working on lowering your costs to the point you begin saving each month.

Once your net worth is in the positive, it is always a good idea to work a little extra on the weekend or occupy yourself with a side gig to make a few additional bucks and then spend it efficiently.

Here are 6 Smart Money moves to make in your 20s.m

No sound investment strategy for the future

The first mistake mentioned above has a contagion effect on millennial’s as it prevents them from not investing. If being a millennial, you have a negative tangible net worth, then your chances of funding are in the negative. Millennial’s often miss out on the advantages offered by financial products that compound interest and like as they are merely ineligible for them primarily due to their spending habits.

While investing can be a daunting task, setting aside money in a financial instrument that will grow over time can be one of the many ways to make money in the long run. Listed below are some of the investment vehicles for your consideration

  1. Index funds
  2. Dividend stocks
  3. Mutual Funds
  4. ETFs
  5. REITs

Each investment vehicle has its pros and cons. It is best to consult a financial advisor or do some research on your part to invest before allocation your savings to building an investment portfolio.

Having a “Living in the moment” attitude

The two mistakes mentioned above gives rise to the third mistake millennial’s make, “Living in the moment.” Millennial’s often dig a hole for themselves by incurring excessive debt with their irresponsible spending habits. The fear of missing out attitude usually takes away from the long term goal of planning for the future.

Living a lifestyle with an attitude of “life at the moment” and “Fear of missing out” is necessarily bad if you approach it with adequate consideration of investing for a retirement savings account. As you grow older, you will require money then to take care of yourself, if you can’t manage your expenses now, how effective will you be in the long run? Long term savings provides a sense of security and cushion, which will be hard to find when you are facing an emergency.

Not understanding the time value of money when measuring costs

They say, “The price of anything is the amount of life you exchange for it.” Millennial often lacks the math behind the thought above. They lack the ability to measure the cost associated with spending habits with the amount of time they have invested in trading for such possessions.

Let’s do the math. On average a millennial gets paid $15.00 an hour which equates to around $40,000 a year. Now let’s calculate your spending

Things bought from spending money Time spent making money
$5.00 cup of coffee Fifteen minutes spent to buy it.
$500.00 bag of Coach purse Thirty-four hours spent to buy it.
 $500,000 house to live in Sixteen years of your life to buy it.


If you look at the first two things bought, you have already accumulated 34 hours and 15 minutes of your hard-earned money in a week towards a perishable and a tangible object. Do you think it’s possible to devise a plan to generate some savings for your future? I highly doubt that. So its best to always think of the future before you spend your precious time today.

Missing the importance of planning for an emergency fund

Life can be unexpected and uncertain for a millennial given their spending and saving habits. It becomes imperative that every millennial must have savings secured in case of an emergency. An emergency can be a simple thing as a car accident or a slip and fall while walking in snow. Both examples would require an immediate need for funds that if not available, can cause further problems.

The article mentioned five easy ways to save money for an Emergency fund highlights the importance of an emergency fund. An emergency fund will protect you and keep you afloat by directing your savings to mitigate the emergency altogether. Remember, long term financial security begins when you start saving today and planning for your future now.

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