Most Common Money Mistake Millennial Make

       In a recent study done by Bank Of America, it was found that an estimated 1 out of 6 millennials have over $100,000 saved up. I'm not sure about how active that study is, but as a millennial, I do see some of my friends make critical money mistakes.

       1. Negative Equity 

Having negative equity is one of the most common money mistakes young people make. Negative equity is when you owe more on an asset than an asset is worth. This is most common with vehicles.

They will buy a new or new(ish) car and the car will depreciate faster than they are making principal payments. When I worked in the car industry and was dealing with a customer that had a monthly car payment- more often than not they had negative equity.

One time I had a customer owe nearly $30,000 on a car that was worth about $15,000. Realistically they had no options but to roll the negative equity into a new loan, refinance and pay it off faster or suck it up and tough it out.

Leasing a car will eliminate any chance of negative equity.

       2. High credit card debt
As Americans, we live in a country that buys, buys and buys. We buy stuff we don't need to impress people we don't like. They impulse buy for no apparent reasons and put it on credit cards. The issue with credit cards? They charge huge interest rates. The average American has over $6,000 in credit card balances. A number that has been steadily increasing.

Credit card companies offer something like 1% cash back in hopes that you use a large amount of credit and don't pay it back before the interest hits your account.

       3. Wrong bank account

I didn't think this was an issue until I got into the banking industry. I see people all the time with a savings balance of $50,000+ in a checking account...? WHY?

In an account that yields no interest. Even basic savings account in today's day has virtually zero value in interest. But the money market account is yielding around 2% ... Sure it's not stock market returns but it's liquid cash that is easily accessible and has no risk factor.

       4. Negative changes in life events
Okay, it's not that I'm against marriage but marrying the wrong person could put a massive financial burden on a person. Aside from assets being divided, the legal fees can bury someone. A child is similar, it's all timing. If you have to take out loans, credit cards etc. to stay above water- It's not good timing.

       5. Bad Purchases
The average smoker smokes 6 packs of cigarettes a week...  a pack cost about $10 that's $60 a week. That would be over $31K over a 10-year span with a 1.79% interest rate on a money market account.

Alcohol, clubbing, even going out to eat one or twice a week are massive financial burdens.

What about those monthly subscriptions that you hardly use? Netflix, Gym, Spotify, Pandora etc?

       6. Not having an emergency fund

An emergency fund and savings account should be completely separate. An emergency fund is if you get a sudden one-time payment that you can't cover with your regular checking account. I recommend keeping somewhere between $500-$1000 in a separate account.

        7. Only having one stream of income
Just like the stock market, you should diversify your income portfolio. Your job will be the biggest income source, but if you could diversify and have multiple people sending you checks for multiple things... Do it.

Passive income is money you can make in your sleep. If you're looking for passive income ideas, check out this article.

http://www.modernizedinvesting.com/2018/10/my-favorite-7-passive-income-ideas.html

       8. Student loans

I'm all for investing in yourself- but you have to choose your battles. Spending $30,000 more for school for the same quality classes does not really make sense, does it? Unless you actually gain some type of experience that you wouldn't get at a more affordable school... why spend the extra money?

       9. Not understanding the importance of your credit score (or how to make it better)
This one is simple. Unless you are insanely rich- it's impossible to avoid taking out lines of credit completely. But what you can control is your interest rates. If you make on-time payments, keep balances, inquiries and negative marks low.. You will have a high score and will qualify for lower interest rates... Resulting in lower payments.

If you are interested in raising your credit score- here is how you can do that.

http://www.modernizedinvesting.com/2018/10/step-by-step-way-to-increase-your.html

        10. Knowing your wants and needs
Something as simple as knowing the difference between your wants and needs is huge- sure those new shoes may be nice... But is the extra 100 bucks maybe even nicer!












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