5 ways through which millennials are sabotaging their finances
If we take a look at the spending trends at present, we’ll observe how most of us happily fall prey to consumerism. Not that there’s anything wrong with occasionally splurging on that Fendi bag or a Guess watch, but regularly spending on unnecessary items can push you away from your long-term financial goals.
Mostly, it is the millennial generation that ends up sabotaging their finances with their spending habits. Millennials face a bitter struggle when it comes to buying a home or real estate, the reason for this being their obsession with consumerist tendencies. They tend to spend more than what they make, and then have a tough time settling their credit card bills and are perpetually cash-strapped. So, what exactly are they doing wrong that puts them off balance financially? Let’s take a look.
A lot of us fail to budget our monthly and yearly expenses. A budget is like a spending framework that ensures you are on track with your finances. It helps you discipline yourself and your spending habits. A budget can clearly pinpoint where you need to cut down on your spending and enables you to spend responsibly. Budgeting will tell you how much money you have and to what extent can you spend it. It is, therefore, an essential tool for your financial well-being. Functioning without a budget is like baking a cake without the measurements.
As mentioned above, the millennial generation spends a lot on dining out, entertainment, and travel. They prioritise these expenses over saving and investing and in turn, end up sabotaging their finances. As per a post by Asiaone.com, Singaporeans spend a lot more on dining than anyone else in the whole Asia Pacific region, and also they are one of the world’s most frequent travellers. In the generation of fast food and fast cars, people don’t think twice before changing their smartphone or their other belongings at the drop of a hat. This leads to overspending, wherein they appear to be rich but barely have sufficient funds in their bank account. Hence, the extensive spending habits of millennials in Singapore is harmful to their financial health.
Failing to plan or the future
The mantra of the current millennial generation is to live in the now. This attitude does not work well for their finances and they fail to plan for their future. This is true for most young graduates who have just started with their first job. They ignore financial planning in the early years of their life to focus on other priorities such as buying a house, or an expensive car, or a foreign trip. As per a 2016 survey showing that 1 in 3 working Singaporeans wasn’t planning for retirement and a 2016 report that very soberingly claimed that too many Singaporeans were putting off retirement planning till too late. Ideally, millennials should start planning for the future from the moment they start earning. They should focus on saving and retirement planning from early on itself.
Not having an emergency fund
When it comes to millennials and their finances the biggest financial mistake they make is by not having an emergency fund. Emergency funds come in handy when you are temporarily unable to go to work because you are shifting jobs or have met with an accident. Ideally, your emergency fund should be at least 6 months of your salary so that you can survive for at least 6 months while you figure a way out to get back to your job. An emergency fund is necessary to protect you from the unpredictable events of life. It prevents you from being burdened by debt when you have no permanent source of income.
Poor debt management
Increasing your overall debt has never been a good way to foster financial growth. In fact, rising debt only sabotages your finances. Using credit cards when you don’t have cash is a very unhealthy way of handling your finances. It not only increases your debt but adds strain to your already draining funds. If you do not have the cash for something, it means you cannot afford it and using your credit card for it is no solution. You might think that money will come in next month and you will be able to pay up the bills, but you won’t realise when your credit card bills pile up and you’re forced to take a loan to pay off your credit card bills. It’s a vicious circle you won’t be able to get out off. Hence, it is important to cap the amount of debt you incur.
These were some of the common ways through which millennials sabotage their finances. A renewed approach towards their finances is the only way to ensure a decent financial health for the current generation.
Best ML in Singapore – 1st LG Credit
Fall into financial crisis? Let’s connect with 1st LG Credit to apply for the lowest interest loan. Our staff will create the best package base on your employment status and credit status. Drop by our office between Mon to Fri 10AM – 7PM, Sat 10AM – 5PM, Sun 7AM – 6PM.
Office address is 304 Orchard Road #02-29 Lucky Plaza Singapore 238863. Call us at +65 6299 6654 or check out www.moneylenderpro.com to get more information.