Millennials, Are You Making These 10 Money Mistakes? Financial Experts Suggest What To Do

We spoke to a number of financial experts to get their takes.

Millennials are pegged for being PSL-loving, avocado toast-obsessing, travel-hungry spendthrifts. However, a 2015 Forbes article cites a study from T. Rowe Price (a global asset management firm) which found that we're actually better about tracking our spending and sticking to a budget, compared to Baby Boomers. The study also found that in recent years, more of us had increased our 401(k) contributions too.

Not that it's a competition or anything. (It is.)

Still, there's surely room for improvement. A 2019 Business Insider article says that the average American millennial has a net worth of just $8,000, can't yet reach any new milestones because of student loan debt and still needs their parents for financial support. Excuse me while I go cry in a pile of bills.

While we don't have total control over all of the circumstances, there are indeed certain money mistakes that millennials are making. I spoke to a number of financial experts to get their takes.

10 Big-Time Money Mistakes That Millennials Make

1. Thinking That Tomorrow Never Comes

"The biggest mistake you can make is postponing saving for retirement," says Annie Shaw, journalist, broadcaster and financial expert. "When you are barely out of college and starting out in the workplace, it seems ridiculous to be thinking about finances for your old age. However, a little put aside now soon grows into a lot later on, due to the miracle of compound interest or via investment growth. Leave it too late and you will have other demands on your income and a mountain to climb to get a decent sum together to fund your old age."

Related: How to Make Successful #MillennialRetirementPlans—Shocker, It *Is* Possible 

"But I don't have any extra money to put aside," cry millennials the world round as they finish their Starbucks. You do. I believe in you. Even if it's just a couple of dollars here and there, listen to Shaw. It will make a difference later on down the road.

2. Not Investing Enough

Sometimes, all we can do is attempt to keep up with our student loan payments. However, we'd be wise to make investing a priority, regardless. Michelle Schroeder-Gardner, personal finance expert and the brains behind Making Sense of Cents (which has won numerous awards since 2011), says, "Sure, you may be saving money, but when a person is new to the whole investing process, they may be overwhelmed. This may lead to them skipping it entirely. Sadly, your money is not doing much, though, if you don't put it somewhere more effective."

Yes. Okay. Indeed. But what about the fact that investing is a giant web of WTF? Schroeder-Gardner assures us we have options: "Investing does not need to be difficult. I highly recommend looking into something super simple such as Vanguard funds. This is another mistake new investors make—thinking that saving needs to be super difficult in order for it to 'work.'"

3. Not Navigating Their Student Loan Repayment

"Student loan debt." Three words guaranteed to give any millennial the dry heaves. But could this be about more than throwing money at your providers? Having a smart strategy here will pay off—literally.

Robert Farrington, millennial money expert and founder of The College Investor, tells Parade, "Another crucial mistake millennials with student loan debt are making is simply not spending the time to find the best repayment plan for them. Either they are kicking the can down the road by using deferments instead of taking action on their loans, aren't seeing if they qualify for loan forgiveness, or aren't looking for better deals in terms of interest rates and terms."

He offers one example of what we could be doing instead. "Instead of deferring loan payments, look at getting on an income-driven repayment plan and making monthly payments that are affordable. These payments are capped at 10-15% of your income max (and can be as low as $0 per month)—so if you can't afford them, you need to look at the rest of your budget," he says. "Using a tool like LoanBuddy can help borrowers find the best repayment plan."

Related: How One Couple Said Goodbye to $78,00 of Debt + Other Side Hustle Success Stories

And here's an early birthday present for you. "50 percent of student loan borrowers qualify for some type of loan forgiveness—whether total or partial. Once again — free money!" Farrington says. "Spend a little time, see if you qualify, understand the requirements and take action."

When you're buried in student loan debt, there are months when all you can think about is surviving at that moment, but Farrington encourages us to think long-term: "The best thing borrowers can do is create a plan and then stick to the plan for the five to 10 years it will take to eliminate their debt."

4. Thinking the Little Costs Don't Count

Let's be honest. We're all guilty of doing that thing where we're like, "It's only $5. That's not a big deal." The problem? It is a big deal.

"Dieters have all heard the 'fake news' that there are no calories in cookies as long as they are small ones," says Shaw. "Likewise, we tend to fool ourselves that coffee on the way to work or a cab home won’t affect our finances. They all add up. The saying 'Take care of the pennies and the pounds/dollars take care of themselves' is true."

Think about it. You might not bat an eye at spending $4 on a cup of coffee. But if you do that three times a week, that adds up to $624 a year. BRB, gonna go have nightmares now.

5. Failing to Compare Buying Versus Renting Options

Everyone has their own opinion on this, which means that it's crucial for you to do your homework before committing to a big financial responsibility.

I'm talking about homes and cars.

Buying has its pros and cons, as does renting/leasing. Purchasing a home is nice because it can be an asset. However, it's also a humongous cost upfront and 100 percent your responsibility to sell, if and when you choose to. Renting is nice because it's less of a financial burden, but then you're essentially tossing money out the window every month for something that's not even yours.

Related: Ask Carrie: What’s the Best Way to Pay Off Credit Cards—and Stay Out of Debt?

Purchasing a car feels empowering and comes with its perks, but a vehicle is not an asset and loses value the instant you drive it off the lot.

There's no blanket rule or one-size-fits-all approach. This is partly because there are so many variables at play, like your age, your income, current debt, and your credit score, just to name a few. Thus, it's insanely important that before you make any calls on a new home or vehicle, you get into the nitty-gritty of buying versus selling, to better understand which option makes the most sense for you.

6. Relying on Shortcuts

Shortcuts are there and ripe for the taking. Just look at student loans! It's too easy for young people to borrow astronomical amounts of money. And nobody's exactly telling you, "Careful! This will haunt you for the next 10+ years!"

And this is just one of many examples.

Related: Hands Down, This Is the Best Way to Save for a Down Payment—Even If You’re Living Paycheck to Paycheck

Farrington cautions us against taking risky shortcuts. "Taking shortcuts with money today may seem helpful, but if you don't fix the problem, you're just going to struggle later on in life," he shares. "Today, the shortcuts are easier than ever—with apps that give free/instant cash advances, tax refund loans offered by every tax company, personal loans always available online, limitless student loans to pay for college and more."

It might be quick and easy to borrow money but resist the urge. "Instead of borrowing, budget," he says. "Fix your financial fundamentals. The short-term fixes may help today, but they also cost more over the long term. By getting your financial picture balanced, you can set up your life for financial success.

7. Trying to Keep Up With Social Media

This is an interesting one. Most of us have experienced at least once being envious of someone we saw on the 'gram. I myself had to unfollow someone on IG because her lifestyle was leaving me feeling inadequate about my own. (I won't name names, but it rhymes with Schmoe Schmardashian.)

Personal finance expert Dominique Broadway tells Parade, "This is a big issue. Remember that people only show you the highlight reels of their lives, not the real deal. Trying to keep up with everyone can put you in a financial bind, and most people aren't doing that well financially anyway!"

Okay. Now I feel better.

Related: Mindful Spending: Do You Know Where Your Money Is Going?

8. Not Tracking Spending

So many of these money mistakes can be avoided if we're simply more mindful of where our cash is going. This can be hard to do when we're paying with most purchases using a card. Factor in bills that are on auto-pay that we don't even have to touch, and for some of us, our finances are much of a mystery.

This is a no-no.

If you don't know where your money is going, then you can't know what's happening to the income you bring in. This can easily snowball into a giant financial cluster-you-know-what. Tracking your spending doesn't need to be hard. Use a spreadsheet or, heck, put it in the notes of your phone or write it on a piece of paper.

The point is to see with your own eyes what you're spending money on each month, broken down into those individual transactions. You might very well find that you're spending way more money on coffee or eating out than you thought. Or you might find expenses you can do away with entirely—like that gym membership you haven't used in four months.

9. Borrowing Money for a Wedding

Here's something that will keep you up at night. The Knot 2018 Real Weddings Study found that couples spend an average of $33,931 on their weddings—and this is just the first of many expenses you'll have with your new partner.

Shaw notes, "Setting up home with another person is expensive and gets more so once your family expands with children and you have a mortgage on your home. Starting out with a debt overhang from the bill for your wedding ceremony is like setting out to run a marathon from a mile behind the starting line."

And I'm already a slow runner. #helpme

10. Ignoring Their Credit Score

Let's back up for a minute because I know there are people out there who don't even know what a credit score is. (There's no time like the present to learn!) Here's Credit Karma's definition:

"Your credit score is a three-digit number that relates to how likely you are to repay debt. Banks and lenders use it to decide whether they’ll approve you for a credit card or loan."

Your credit score largely reflects how often you make payments on time, along with how many of your accounts are in good standing. For instance, if you're constantly defaulting on your student loans or missing your car payments, this will negatively impact your score.

Scores generally range from 300 to 850, and the higher, the better.

One of the main reasons you need to care about your credit score is that banks and lenders use it to determine if they'll give you a loan or credit card. Crappy credit? Don't count on buying a home or car, or anything on credit, for that matter.

Also? Your credit score is an indication of your financial health, plain and simple.

Understanding how to manage your money can seem like a maze at first. But with time and patience, you can easily avoid these common money mistakes.

Got debt? We talked to financial experts to get their intel—and here’s why a debt payoff poster might be a must.