Millennials are today’s largest consumer group. They were born between 1981 and 1996. Even with this generation’s obsession with the internet, many still fall into common money traps.
You may use web research to educate yourself and make better buying decisions. But did you know that according to a study, only 16% are financially literate? This is the very reason why many fall victim to different financial traps that affects a millennial’s life for a long time. If you don’t want to end up suffering a huge financial blow, then make sure not to make the same mistakes like the following.
Buying a house you can’t afford
Everyone wants a house of their own. But not everyone can afford one. Even if you do know for sure you can leverage mortgage to buy your own house, it can be hard to predict if you will have a stable cash flow for the duration of your mortgage term. Remember that the cost of homeownership is nowhere cheap. If you max out your lender’s loan amount, you can end buying a home you can’t realistically afford.
To avoid this, be sure to take into consideration all the fees and expenses associated with the home purchase. These include the down payment, closing cost, monthly home loan fee, utility, property taxes, and homeowner’s insurance. When buying a house, it would be best to choose one that is energy efficient so you can save more from your energy bills each year.
Don’t forget to invest in the right insurance to protect yourself against costly damages. The good news is that even mobile and manufactured homes now have insurance. This means you can buy an energy-efficient house built in a factory with better insurance coverage.
Allowing the word “free” to always tempt you
One marketing strategy businesses do to lure millennial consumers is by using the word “free” in their offerings. Gen-Yers are into brands that offer lots of freebies and amazing deals. But the sad reality is that many millennials become victims of such a marketing scam since they fail to weight in all the pros and cons.
Take credit cards, for instance. Most millennials are credit cardholders. Instead of choosing a low-interest credit card, they would rather pick an interest-free credit card which often has higher annual fees. This is one reason why more than 50% of millennials are stressed about credit card debts. For best results, check all available options and weigh in the perks and drawbacks first.
Saying yes to instant gratification
Millennials may be financially-conscious, but they are also prone to giving in to instant gratification. This means manyGen-Yersend up buying the things they don’t need just to experience an instant but non-long-lasting pleasure. One way to address such an issue is to write your financial goals. This way, anytime you are faced in a tricky situation where your brain is encouraging you to buy something asap, think of your goals and delay your purchase.
There are other money traps many millennials are prone to. But this list shows the top three things you need to be aware of so you don’t have to suffer the same route as the others. This will help set you up for a better financial future.