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Not Making Tax Payments, and 7 Other Mistakes Millennials Make With Their Money

I think there is a disconnect between many Millennials and their money. It’s different than it was for their parents, or even for the some of the Gen Xers that came before, because the more time that passes, the harder it can be to accumulate wealth.

We don’t have time to get into the whys of that here, but listen – you’ll never save anything if you don’t try, right?

If you’re a Millennial looking to make smarter money decisions going forward, here are 8 mistakes you’ll want to avoid.

8. Living beyond their means.

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A recent Lending Tree survey found that 3 out of the top 5 Millennial expenses that accrue credit card debt are making ends meet, clothes shopping, and eating out.

This seems to suggest that there are some misplaced priorities and an unwillingness to stick to a reasonable budget.

Don’t get into debt trying to keep up with the Joneses.

7. Avoiding credit.

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Plenty of Millennials grew up watching their parents struggle with credit card debt during the recession, and so refuse to open credit card accounts at all.

Experts warn against this practice, because credit makes the world go ’round, and if you need to buy something larger like a home or a car, having a limited credit profile could work against you.

6. Not saving for retirement.

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Many Millennials seem to have a “live for today” attitude, choosing to spend their money now instead of save it.

But the longer you wait, the more interest you lose out on, and the future is never as far away as it seems.

5. Avoiding risk.

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Millennials do tend to invest, but according to an AMG Funds survey, only 30% of them are stock investments – one-third below what average investors hold.

When you’re young, take the risks – you’ve got time to recover.

4. Missing out on rewards.

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Speaking of credit cards, if you’re too scared to use them, you miss out on things like cash back, miles, and other bonuses that are sincere reasons to apply.

3. Letting their student loans default.

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Around 13% of student loans are in default, and those behind-payments can have lasting financial consequences.

There’s help available, so don’t just ignore them – call and ask for assistance.

2. Not taking advantage of their 401k.

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If your company has a 401k match, deposit the maximum – you never want to leave free money on the table.

Ever.

1. Not making estimated tax payments.

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So many people are freelancing or living off the “gig economy,” but that lifestyle can be fraught with tax challenges.

Don’t wait until the end of the year, because the bill you get could be bigger than what you can pay – the IRS charges penalties for not paying as you go, too, and you don’t want to get on that merry-go-round if you can help it.

I think this is very good advice!

If you’ve got anything to add to the list, please share it with us in the comments!