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3 Mistakes Millennials Make With Their Money

Millennials, like every other generation, have made their share of mistakes with money.  While thinking about the thousands of conversations I’ve had about this subject, a few things seem to stick out like a sore thumb.  First, getting a second or advanced degree can either be a huge success or an extreme set back if done wrong.  Second, with freelancing and contractual work on the rise, these millennials need to know how to manage that money.  Lastly, with 401K’s being the norm for those who are employed, that means they need to make some investment decisions.  These three issues can be a pivotal moment for your finances and your life.  Don’t be intimidated! These concepts are relatively simple to grasp.

Should I Get Another Degree? Maybe a Masters?

In my experience talking to people, getting a second bachelors degree is rarely a good decision.  I’m not saying the education is worthless, I’m merely suggesting it’s not worth the time and money.  If you’re really dead set on getting another degree, many times you can parlay your current one into a Masters program (even if they aren’t related.)  Depending on what you are looking to do, you may only be a couple prerequisites away from getting in.  Don’t trust the counselors to do your due diligence for you, higher education is a business.

Another common situation is in going for that advanced degree. After the financial collapse of 2008, Millennials enrolled in Masters programs, adding on another 20-30K onto their student loans.  If the job demand for your advanced degree isn’t hot, the ROI on this investment isn’t going to be worth it.  While many went to make themselves more marketable, some went so they don’t look like a loser living in their moms basement with no job.  Don’t be that person!  A cost effective way of optimizing your competitive edge is to search for professional certifications.  A lot of professions value this even more than a Masters degree.  Think about it, generally speaking, who would you rather hire? A Certified Financial Planner or someone who Mastered in Finance?  Some of these certifications may require you to have a specific degree, this may be a better reason to pursue a Masters or second Bachelors.

ROI: Return on investment

What Do I Do With My Side Hustle Money?

With freelancing on contractual work on the rise, there is a bunch of untaxed and uninvested money lying around.  First, consider opening a business account.  If you’re making more than a couple thousand dollars, this may be worth it.  In the event of an IRS audit, they aren’t going to like mixing your personal money with your business money.  Remember, even though you may not see your side hustle as a full scale business, the tax authorities might – so be smart.  Second, piling up your money in a savings account isn’t doing anything for you.  Sure, it may provide you with a sense of stability but you ARE leaving money on the table.  Successful people would put that money to work.  Some options are to invest in back in your business, deposit it into a tax deferred retirement account, or invest in another business.  As far as tracking your figures, see my post “Know Your Numbers” for further information.

Do You Know What Your 401K Money Is Invested In?

I haven’t done an official survey, but I’d bet 80% of people don’t know what their 401K is invested in.  Most people literally have no idea, this is troubling!  Reach out to someone who knows what they are doing and ask them for help.  Diversification, in connection with a successful mix of asset allocation will grow that account like never before.  Also, take some personal responsibility and read a couple books on investing.  Know one will ever care about your money more than you do.  Jim Cramer’s Real Money helped me really understand how the stock market works in conjunction with the economy.

Get ahead of the crowd and sure up these three common weaknesses.  You won’t regret it when you look at your situation in 10 years!  Join my Facebook group here to continue this conversation!

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Eric Estevez
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