The 17 Financial Mistakes Millennials Make

1. You Aren’t Taking Advantage Of Your Workplace Benefits

One of the biggest financial mistakes we see Millennials make is not taking advantage of their workplace benefits. Even if you’re not earning a ton, chances are your company has some type of 401(k) program that allows you to save for retirement on a tax-advantaged basis.

What about health insurance? If you don’t have any, talk to Human Resources about getting on the company plan. 

Even if it costs more than what you could get through an online platform like health insurance or

There are often other perks such as dental and vision coverage that come along with being insured through work something those websites can’t provide for free (and probably won’t offer at all).

You should also check out all the other types of benefits offered by your employer: life insurance; flexible spending accounts; tuition reimbursement; employee discounts; employee stock purchase plans (ESPPs); and employee stock ownership plans (ESOPs).

The Biggest Mistakes Millennials Make & How to Avoid Them
1. Understand the financial mistakes commonly made by millennials.
2. Be aware of the impact of overspending and accumulating excessive debt.
3. Prioritize saving and build an emergency fund for financial security.
4. Take steps to manage student loan debt effectively.
5. Improve financial literacy to make informed decisions about finances.
6. Avoid living paycheck to paycheck by creating a budget and reducing unnecessary expenses.
7. Consider additional income streams to increase financial stability.
8. Plan for retirement early and avoid delaying saving for the future.
9. Be cautious of credit card debt and maintain a good credit score.
10. Seek professional advice and educate yourself on personal finance topics.

2. You Don’t Have An Emergency Savings Fund

If you’re a millennial, you’ve probably heard about the importance of having an emergency savings fund. But what exactly is it? In short, your emergency fund is money that you have saved in a separate bank account for emergencies (duh!). 

Some people call this their “rainy day” fund because they plan to draw from it when they get caught in a downpour of bad events like losing their job or having car trouble.

The amount of emergency cash you should have varies by person and situation, but I recommend starting with three months’ worth of living expenses as a bare minimum. 

If your monthly rent is $1,000 per month and you make $3,000 per month after taxes, that means your total monthly expenses are $4,000; 

Dividing this number by three gives us an estimated annual expense of $1 million which we round up to one hundred thousand dollars ($100K). 

So if you’re saving up enough money to cover three months’ worth of living expenses (which comes out at around 100K), then congratulations: You’re ready for any tough times that come along!

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3. You Are Living Above Your Means

Living above your means is a surefire way to make financial mistakes. You will be stressed and more likely to spend money on unnecessary things, which can lead to credit card debt. 

Living below your means is a better option because it’s easier to do than living above it and more rewarding in the long run. 

You’ll have more savings, which means you’ll have something in case of an emergency or if you decide you want a big purchase like a house or car down payment.

Living below your means also allows for flexibility in case something unexpected happens that requires extra spending (a job loss, medical emergency). 

This can be done by keeping extra money in an account that’s not easily accessible so it’s not tempting when problems arise but still there if needed:

Keep some cash in an envelope hidden somewhere safe for example under the mattress or behind some books on a shelf where no one else would look for it and don’t look at it except when necessary (like during an emergency).

Put some into an investment vehicle like mutual funds or stocks with low fees where growth won’t be affected by market downturns like what happened recently (2008-2009 stock market crash).

4. You Aren’t Saving Enough Money For Retirement

You’re saving for retirement, but not enough.

Saving for your golden years is a must, and it’s more important than ever before to start early. The earlier you get started and the more you save, the easier it will be to reach your retirement goals. 

You should strive to contribute at least 10% of your annual income (and 15% if possible) to an employer-sponsored 401(k), which offers tax advantages that can help boost your savings rate even further. 

Even if your employer doesn’t offer a 401(k), many employers match employee contributions up to a certain percentage of their salary so take advantage of this opportunity!

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5. Your Student Loan Debt Is Out Of Control

This is a big problem for many millennials, who are stuck with student loan debt that they can’t pay off. One survey found that more than half of graduates have at least $30,000 in student loans to repay.

That’s not all: The average salary for college grads is lower than what their parents earned just 25 years ago. That means millennials are spending much more on education and making much less once they get out into the workforce.

One way to solve this problem is to refinance your student loan debt into a lower interest rate or balance (this is called refinancing). 

You could also ask your employer if they offer any tuition reimbursement options; some companies will reimburse you for up to $5,250 each year toward your educational expenses.

6. You Have Nothing In Your Savings Account

When you’ve got nothing in your savings account, it’s time to start building up a little nest egg.

A savings account is an essential financial tool for several reasons:

  • It helps you get a better handle on your money and gives you a place to save money that’s separate from the checking account where you spend most of it.
  • It allows for emergency funds that can be tapped if something goes wrong like when your car breaks down or there’s an unexpected medical bill.
  • It gives people peace of mind because they know they won’t have to borrow money when things get tough.

7. Your Credit Score Is Below Average

The first thing that comes to mind when you think of your credit score is probably something like this:

I don’t know my credit score.

I don’t need to know my credit score.

What’s the big deal? Just apply for a loan and they’ll tell you what it is anyway! If they think you’re good enough to get a car or home, surely they won’t turn you down based on an arbitrary number, right? Wrong! 

Here’s why knowing your FICO (Fair Isaac Corporation) score matters:

It indicates whether or not banks will trust you with money. Think about it if a bank invests in someone who doesn’t pay their bills on time, they are essentially betting on that person not being able enough or responsible enough to repay them in a timely fashion. 

Banks only want their money back as fast as possible (with interest). They also want guarantees that this person won’t suddenly disappear after getting their hands on all that cash and never be heard from again (aka “deadbeat”). 

So essentially, if someone has bad credit scores then there’s no way for them to prove themselves trustworthy over time since most lenders require at least two years worth of history before approving any type of loan request at all.

And even then there will be some restrictions placed upon borrowers who want access to more than just necessities like groceries or rent payment vouchers.

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8. Your Investment Portfolio Isn’t As Diversified As It Should Be

Diversification is important for your investments and the rest of your life. A diversified portfolio means investing in different types of assets, not just stocks and bonds; it also means having a mix of asset classes.

Let’s say you invest all your money in stocks, which are volatile and can lose value. To make things worse, you don’t have any cash on hand to cover living expenses if there’s a market crash or recession because then you’ll have to sell all those stocks at a loss (i.e., lose money). 

Your home may also be underwater from overpriced real estate prices that have dropped significantly since 2008/2009 so it’s not worth much anymore either! 

If this happened to me I would probably move somewhere else where I could get better jobs for less pay than what I’m making now but who knows? Maybe we’ll all die from global warming instead…

9. You Have Been Ignoring Basic Bookkeeping And Filing Tasks

Keeping track of your spending and income is the first step in financial planning, but it also helps with tax preparation. How much money you owe or how much to claim back can be calculated using your bookkeeping records as a starting point. 

The U.S. Internal Revenue Service (IRS) recommends that taxpayers use a method called “specific identification” when calculating their deductible expenses.

Rather than just claiming a flat percentage of their income or assets such as 20 percent or 25 percent of utility bills if they are not sure how much they spent on each item during the year.

Because doing so increases the chances of getting audited by IRS agents who will want proof that those deductions were made before deciding whether or not any changes need to be made at tax time next April 15th – April 17th depending on where you live (if not already filed for 2017).

10. You Have An Irresponsible Spending Habit

You’ve got to budget, and you’ve got to do it with a pen and paper.

You need a system for keeping track of your income and expenses and then actually sticking to it. This way, you’ll know where your money is going and how much is coming in. 

You can also use this information as a tool when making financial decisions like buying furniture or taking vacations. 

And if something comes up that needs immediate attention (like an unexpected vet bill).

Tracking your spending will help keep things in perspective so that you don’t end up throwing good money after bad on unnecessary purchases right now just because they’re convenient or fun right now.

11. You Are Buying A Home Before You’re Ready

Buying a home can be one of the most exciting times in your life and it’s easy to get swept up in the excitement and rush into something before you’re fully prepared. 

Before considering buying a house, make sure that you have saved enough money to cover all expenses including maintenance, property taxes, and potential renovations, and still be able to afford monthly payments on top of that. 

It’s also important not to get caught up in the hype surrounding homeownership because there are many factors beyond just being able to afford the down payment; consider whether or not this is really what’s best for your current situation.

Be honest with yourself about how much time and energy you can realistically devote towards maintaining the house (and whether or not this will impact other aspects of your life). 

If you don’t have time for yard work every weekend or don’t want an hour commute every day from work due to location limitations then maybe buying isn’t right for now

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12. You Are Stressed About Money Regularly

It seems that money is a source of stress for many people. If you’re having trouble paying your bills, it can be hard to sleep at night; if you’ve got more than enough money in savings but no idea how to invest it, then the uncertainty may be causing angst; 

And if your finances are fine but other people’s are not, then you might feel like there’s something wrong with them or their priorities are not with you.

All this stress about money can have real consequences on our health, relationships, and work performance: According to a study by the American Psychological Association (APA), “Young adults who had high levels of financial stress reported poorer physical and mental health.” 

It also affects our ability to make decisions: A study by Northwestern University found that “financial worries led participants’ brains into an ‘impulsive mode.'” 

The researchers concluded that being stressed about money leads people toward risky behavior because they want immediate rewards instead of long-term gains.

13. You Make Emotional Purchases Rather Than Rational Ones

It’s easy to get caught up in the emotion of a purchase. You see a new shirt and it looks good on you, so you buy it. Or maybe you had an amazing time at that concert, so you decide to splurge on tickets for another show when they go on sale.

But just because something makes your heart sing doesn’t mean that it makes sense to spend money on it. If a purchase doesn’t align with your long-term goals or budget, then don’t make the purchase! 

If you find yourself making more emotional purchases than rational ones, ask yourself: Do I need this? Will this add value to my life? The answer should be yes!

14. You Don’t Check Up On Your Investments Regularly

You don’t check up on your investments regularly: It’s important to monitor the performance of your investments, but it can be easy to let this slip away. If you haven’t checked in with your portfolio for a while and are wondering where all those returns went, now is a good time!

How often should I check? That depends on what type of account you have, for example, if it’s a 401(k) or IRA (individual retirement account), there are required minimum distributions (RMDs) that must be taken by age 70½.

But most financial advisors recommend checking in at least once per year. If there’s nothing urgent going on with one part of an investment strategy.

Such as rebalancing or diversifying holdings into different asset classes, checking every few years might be sufficient; however, other factors like portfolio volatility and market trends can warrant more frequent monitoring.

What should I look for? There are two primary things I’d recommend looking out for overall portfolio performance (which could indicate issues with risk tolerance) and any changes made within the investment itself (ease-of-use features like auto rebalancing can help here). 

For instance: If stocks were performing well last year but aren’t doing so hot this year after going through some major market corrections…it might mean something has changed within that particular stock which could affect its future returns. 

Or maybe you’re having trouble understanding why there was a big drop in one of your mutual funds’ value recently.

It may have something related to fees being deducted from your accounts without being reflected properly when calculating returns calculated over longer periods such as five years rather than just one year.

15. Your Income Doesn’t Match Your Lifestyle

  • You make more money than you spend.
  • You spend more money than you make.

If this is the case, it’s time to take action! If your income doesn’t match your lifestyle, the best thing to do is get a second job or start moonlighting with a side hustle to bring in extra income. 

On the other hand, if you are spending too much and making less than what’s needed for your lifestyle, then it’s time to cut back on expenses and scale back on what you can afford until things increase in pay.

16. Your Phone Or Tablet Bill Is Too Expensive

There are a few steps you can take to ensure that you’re getting the best deal on your phone bill.

Ask for a call-back from your provider and make sure they aren’t offering you any discounts that they forgot to mention.

Call up other service providers and get quotes on their services they might be able to save you money by switching providers or even buying minutes separately instead of getting an expensive plan with unlimited data and texts.

If possible, try using Wi-Fi when making calls instead of using cellular data or relying on mobile hot spots; this will help reduce costs significantly over time because most carriers charge per minute rather than per megabyte used (which is more expensive).

Avoid buying those pre-paid plans that come with “free” smartphones; the companies who offer these deals typically profit more from selling contracts.

Then being in the business of providing phones themselves (this means they’ll often push salespeople toward pushing contracts rather than other options).

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17. Your Financial Plan Isn’t Flexible Enough

A good financial plan should be flexible.

To make your plan more flexible, you can do things like:

Create multiple savings goals. If one goal is too short-term, or if you change your mind about what you want to do with that money, then it’s not worth setting up a separate account. 

Instead of saving money for something specific like a trip or car purchase try saving for multiple goals at once. That way, if something happens and the demand for the money changes due to an emergency or other unexpected event (as it often does).

You still have options available to help get through those times without having to compromise on what matters most to you right now (and into the future).

Keep track of how much cash flow comes in each month so that there’s always enough left over after all expenses are paid off each month before spending on fun stuff like dining out at restaurants or going on vacations abroad; 

This way there won’t be any surprises that could derail everything else in their lives by draining resources unexpectedly while they’re trying hard not only just survive but thrive financially too!


We hope you found this article helpful as you work to improve your financial wellness. Don’t beat yourself up if you find that you’re making one or more of the above mistakes! 

But, we do hope that by learning about these common pitfalls and why they’re problematic, you’ll be able to work on improving your bad habits to reach your financial goals. Remember: It’s never too late for a fresh start!

Further Reading

Here are some additional resources to further explore the topic of financial mistakes made by millennials:

The Biggest Money Mistakes Millennials Make, According to a Financial Planner: Learn from a financial planner about the most common money mistakes millennials tend to make and gain valuable insights on how to avoid them.

Money Mistakes Millennials Should Avoid: Parade offers a concise list of money mistakes millennials should be aware of and provides practical advice on how to navigate financial challenges successfully.

Top Ten Financial Mistakes Millennials Make: Oklahoma Central Credit Union outlines the top ten financial mistakes frequently made by millennials. Explore this comprehensive guide to understand potential pitfalls and make smarter financial decisions.


Here are some frequently asked questions related to financial mistakes made by millennials:

What are some common financial mistakes millennials make?

Millennials often make common financial mistakes such as overspending, not saving enough, accumulating excessive debt, and neglecting retirement planning.

How can millennials avoid living paycheck to paycheck?

To avoid living paycheck to paycheck, millennials can establish a budget, track their expenses, reduce unnecessary spending, build an emergency fund, and consider additional income streams.

What are the long-term consequences of financial mistakes for millennials?

Financial mistakes can have long-term consequences for millennials, including limited savings, higher debt burden, compromised credit scores, delayed retirement, and reduced financial security.

How can millennials overcome student loan debt and manage it effectively?

Millennials can manage student loan debt effectively by creating a repayment plan, exploring loan forgiveness or consolidation options, seeking income-driven repayment plans, and considering refinancing options.

What steps can millennials take to improve their financial literacy?

Millennials can enhance their financial literacy by educating themselves through books, podcasts, online courses, and workshops, seeking advice from financial professionals, and actively managing their finances.