The millennial generation are surely one of the most mischaracterised people ever to walk the Earth. Baby boomers and Generation Xers have has a field day perpetuating myths about today’s 20 somethings which are accepted as universal truth but wither dramatically under the light of scrutiny. We’re characterised as lazy, selfish and indolent. We’re presumed to spend our days scrolling through our social media feeds expecting wealth, fame and fortune to simply drop into our laps. Oh, and we can’t afford to buy our own houses because we just can’t get enough smashed avocado on toast. But these unfair stereotypes obfuscate the simple truth that previous generations have had a huge economic leg up over the millennials. Baby boomers certainly never had to worry about an increasingly sparse and competitive job market. They didn’t leave university with nearly £10k in debt. In fact, for many of them their university education was free and didn’t come at the cost of a crippling aspiration tax. They bought property when it was cheap, sold it when it boomed and their housing costs were affordable enough to allow them to save and still have disposable income. They had job security and proper pension provision.
Millennials on the other hand must contend with the caprices of the gig economy, view the prospect of retirement as a pipe dream and a barely regulated private rental market means that most of them are getting ripped off on their rent to the extent where saving for a home of their own is about as realistic as walking on the moon in terms of life goals. If you’re of the millennial generation; if you’re studying or a recent graduate or trying to ascend the greasy pole that is the career ladder, it is incumbent upon you to prove previous generations wrong and challenge their preconceptions about millennial money management. But for many of us, it means letting go of some assumed truths of our own. Here are some money management myths that we all need to debunk if we’re to take control of our finances and blaze a trail for today’s 20 somethings…
You can’t get good financial products on a bad credit score
Many millennials are on the back foot when it comes to our credit scores, since we’re already ten grand in the hole with student debt. But if you’ve had to rely on loans and credit cards to help you scrape through your education, there’s a good chance that your credit score has impeded your ability to get access to decent financial products… or so you may assume. There are actually loans designed especially for people with poor credit scores with far more reasonable rates of interest than payday loans. Check out Avant loans for more info. Moreover, you can make efforts to repair your credit score using a debt consolidation loan. Not only will this make your debts easier to manage, it will improve your credit score because all of your existing debts will be replaced with a single new debt. So long as you can keep up the repayments on it, you’re golden.
Eating healthily is expensive
Good health starts and ends with a good diet. There’s no way you can be expected to be at your best at work, at home, in sport, in extracurricular activities, at the gym or in your personal relationships. Bad nutrition can impede concentration, make staying in shape seem like an uphill struggle and increase our chances of depression. Yet, for those on a limited budget it can seem as though cheap, heavily processed sugary, fatty, salty convenience foods are our only option. But eating healthily costs much less than you think. Switching to a mostly (or even entirely) plant based diet can not only give you comprehensive nutrition it can save you a small fortune. With the rising cost of meat, eggs, fish and dairy, a plant based diet can save your health and save you money.
That said, this can only work if you’re prepared to put effort into cooking and really take the time to cook something that you’ll enjoy eating. If eating right means choking down food you can barely stomach, you’ll be throwing a fortune away on takeaways before you know it.
You don’t earn enough to save
Many of us assume that we don’t have the capacity to save because we’re on a limited income. This is, however, pretty far from the truth. Even if your income is sparse, you should make an effort to set aside some money for savings. Many of us tell ourselves, “I’ll take what’s left at the end of the month, and put it into savings” and then, at the end of the month there’s nothing left. Prioritise saving. Set up a direct debit into your savings account every month, and set up a savings account that doesn’t suck. Most high street savings accounts offer really poor rates of interest so you’re far better off with an online savings account. Here are some of the best.
Cash is king
Our parents taught us that it was always best to pay with cash. And for them, it probably was. But discounts for cash are much less of a thing now than they were when they were our age. Credit cards can offer extended warranties, extended insurance and fraud protection giving you more means of recourse if something goes wrong with a major purchase.
A savings account and an emergency fund are the same thing
Or if they are, they shouldn’t be. Your emergency fund should be a completely separate account to your savings account. Why? Because you need quick access to an emergency fund, and the best savings accounts, the ones with the really juicy interest rates, require you to keep the money stowed away for a few years. And once that money is stowed away, it’s very difficult to get back out.
Having a bit of credit card debt is good because it improves your credit score
Finally, we need to address the fallacy that keeping some debt on your credit card is good for your credit score. All it’s really good for is throwing money away on interest payments. This logic only works if you’re completely clearing your credit card debt each and every month. Not many of us are able to do that.