Here are 5 common mistakes millennials make that hold them back from financial success and more importantly, how to fix them:
1. Goal setting
Building up savings or investments isn’t easy, but it is far more difficult when there is no clear goal in sight.
Goals like saving for a house deposit, a wedding, or an emergency fund can frequently seem unattainable, preventing us from setting goals for ourselves in the first place. However, this has a significant effect on our motivation to save.
Give yourself a financial goal and a deadline before you start saving or investing to keep your motivation high.
2. Short-term saving and investing
The most sustainable plan will always be the best one when it comes to regularly saving/investing.
Make sure your regular contributions are sustainable for you before starting them, even if that means starting a little slower than anticipated. Sticking to a long-term investment or savings plan is better than a short-term aggressive one.
The longer you play the game, the better the outcomes.
3. Passive spending
It’s easy to get caught up in spending on stuff we don’t really value or want. If this sounds like you then give the following a go:
Look back at your bank statements from the last several months
Classify your spending into one of the three following categories:
1) Expenditure taking you towards your goals
2) Neutral expenditure
3) Expenditure taking you away from your goals
Make an effort to cut spending where it is deviating away from your goals or isn’t adding any value to your life. By doing this, you will have additional cash to spend on items/experiences you want to or to save/invest.
4. Falling for the hype
I’ve seen far too many millennials get burnt by cryptocurrency or an individual share that’s the next big thing. Resist the urge to succumb to persuasive and emotive sales pitches that convince you that this is a once-in-a-lifetime chance to earn huge sums of money.
Instead, opt for a diversified portfolio of investments so all your eggs aren’t in one basket, take your time and make sure you understand the nature of any asset before you invest.
5. Focusing solely on salary
Many of us only look at one thing when taking or changing a job – the salary.
However several other factors come into play which may have a greater long-term impact:
Career progression – is there room for career progression and what does this look like? Could I take this career and go self-employed? Does this career have a salary ceiling?
Pension benefits – how much does the employer contribute to my pension and do they match any extra contributions I make?
Bonus/Equity compensation – what is the bonus structure? Does this company offer any equity compensation such as Restricted Stock Units?
Understand the full compensation package with any career/job to make sure you’re looking at the whole picture.
If you felt yourself resonating with one or all of these mistakes, then don't stress. Improving your financial situation takes a long time so be patient and create habits that are sustainable over the long term.