Since a staggering majority of Millennials just entered the workforce, most of them fall for the same traps that ensnared generations.
However, there is something unique about the new generation that makes their financial shortcomings unique—and a lot of them fall for the said trap.
Here are just some of the financial mistakes committed by the Filipino Millennials.
Paying bills beyond due dateLet’s face it: the digital age is such a vast jungle, and Millennials tend to get lost amidst the tidal wave of information on the internet. With some many details keeping us distracted at all times, we tend to forget our daily responsibilities, including paying our credit card and utility bills. As a result, we suffer from consequences such as penalties and other fees that come with settling bills beyond due date.
One way to avoid paying bills beyond their due date is to use the same assets that distract us from paying on time: technology. You can use apps such as Mint or even your native calendar application to remind you of incoming deadlines.
Furthermore, you can enroll your bills in a savings account—a feature now available in almost all accounts—and the bank will automatically pay your bills for you.
Spending too much on gadgetsGadgets like smartphones, laptops, and cameras are supposed to make our lives more convenient. However, the nearly endless production of newer gizmos every now and then makes it hard for us to stay contented with our current gadgets. Because of this, we are trapped in an endless cycle of acquiring gadgets and wasting money senselessly.
To counter this needless desire for new gadgets every now and then, ask yourself a few things. Is it really necessary for me to get a new phone right now? Do I have enough cash get a tablet? If I put this money into savings instead of buying a new camera, how much will I earn?
Once you come into conclusion that you actually need to buy a phone, then by all means do so. However, make sure that getting a new gadget will never hinder your other financial responsibilities.
Not having a monthly budget planThis is probably one of the main problems with Millennials. With the happy-go-lucky (often dubbed as YOLO by Millennials) attitude towards almost all things, most of them tend to have myopic vision when it comes to handling monthly budget. Without planning a monthly budget, many Millennials fall for several financial traps such as spending beyond usual budget.
Budgeting may be a sore to some Millennials, but there are tools that can help them create a monthly budget without the need to go through crash course of budgeting. Apps like Goodbudget and Level Money have clean and crisp interface that allows users to make budgeting much easier and friendlier.
Furthermore, using simple budgeting formulas such as income minus basic expenses can help you get started with creating a budget plan. Finally, financial comparison website eCompareMo.com recommends the famous 50-30-20 budgeting method for beginners, most especially for people who don’t want to skimp on life’s pleasures.
Disregarding the “emergency budget”As part of the YOLO mentality most Millennials have, disregarding about the future seems to be a bit of a habit for them. Another common financial mistake by Millennials is not being very fond with emergency funds.
While some of them have ample balance in their savings account, others do not invest in a budget that can be used during rainy days. Come times of crises and people will deplete their savings account or worse, have nothing at all.
Before you start growing your savings account, one thing you need to take care of is your emergency fund. Most financial websites recommend at least six months’ worth of expenses, just to be on the safe side.
Once you’ve completed your emergency fund goal, you can finally start your savings account and become financially stable even during the rainy days.
Relying too much on credit cardsCredit cards can make our lives more convenient. With credit card promos becoming more and more attractive, more people are becoming attracted to getting credit cards. With shopping at an all-time high, the role of credit cards has never been more significant.
However, many credit cardholders tend to rely too much on plastic, one way or another. For Millennials who own more than one card, the best way to save is to cut your other cards and just stick with the card that’s most beneficial for you.
Whether you want to keep the card that has the lowest interest rate or highest rewards, it’s up to you. Also, make sure that you only use your cards whenever you a transaction will accrue points—and pay them on time and in full.
Millennials may have a different approach when it comes to their finances, but this doesn’t mean that they won’t be able to help themselves be in control of their money. With the knack for changes, sheer willpower, and a little perseverance, Millennials can actually save themselves from financial doom.
About the Author:
Ariel See is a freelance writer at eCompareMo, an online comparison portal in the Philippines. He supplies articles to top industry leaders in US, UK and Southeast Asia. He worked as a Graphic Designer before he explored the field of writing.
*Photo Credit: Rafael J M Souza (Creative Commons)