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What Every Millennial Should Know About Personal Finance
The problem is just that the world we grew up in is full of technology and distractions, so we live life a little differently than our parents and grandparents.
Of course, the goal is to use the gifts and benefits of our generation for the better and not for rotting in front of the TV, amiright?
Along with being well educated and globally aware, there’s another component of millennial life that should be addressed and improved: our understanding of personal finance.
With most of us going to college or graduating during a recession and with an increased spotlight on the high cost of education, there are more than a few of us that have to deal with extremely high student loans and poor financial choices.
Now, more than ever, it’s so important for us to get a hold of our finances, take responsibility by learning about the economy, and understand a few basic personal finance principles, like the ones below.
1. Time Is On Our Side
There is always a big debate over whether or not to save for retirement or pay off debt first. Most millenials will say they can’t save for retirement because they have too many student loans.
Trust me, I hear you. My husband and I have six figures of student loan debt combined.
However, I still maxed out my IRA last year because I understand the importance of time. First of all, it’s going to take me a really long time to pay off my student loan debt, and if I waited to invest until I was finished with that obstacle, I would have missed out on 10 years of an opportunity to grow my wealth.
It’s not easy, and the $5,500 I used to invest last year would have put a dent in my student loan balance. However, to me, I need to think about future potential and long term gains all while tackling the loans that I currently have.
Basically, if you are in your 20’s, please don’t wait until your 30’s to get started on saving for your future. The longer you wait, the harder it will be to catch up.
2. You Have To Pay Your Bills on Time
Paying bills is not optional. You simply have to do it. If you can’t pay your bills, then there’s a bigger problem where you are living above your means or spending too much. Your apartment might be too expensive or you might need to fight to get a raise or a higher paying job.
I’m flexible on a lot of things, but paying bills isn’t one of them. If you want to know how many times you’ve been late on your bills, just pull up your credit report, and there will be lots of fun reminders on it.
This is one of those things that is just a part of growing up and being organized. If you want a really bright financial future and family of your own, make sure you are paying these things on time so you don’t damage your chances of securing good interest rates in the future.
3. You Won’t Remember What You Bought With That Credit Card
About a year ago, I became credit card debt free. My balance was not crazy high, $6,000 at it’s peak, but it was enough to make me nervous and make me want it gone. I think back to the days when I had it, and I can’t remember how it got that way. I know I spend a good bit of money on my husband’s medical school applications and then some moving costs. I also know I had a lot of craft projects and dinners out. However, none of those things really stand out as exceptionally awesome. There’s not one moment that I recall swiping the card and really being glad I had it.
If you are in credit card debt or seeing your balances inching up, go ahead and stop now. Whatever it is, it’s not worth it because you won’t remember how it got that way. Most credit card debt is just a combination of a bunch of small, meaningless purchases. Figure out your patterns and habits now to ensure you have a nice, long successful future.
What are some other personal finance lessons that every millenial should know?
Photo Credit: C. Eichelberger