What Millennials Need to Learn About Money
Millennials have had to adapt to a tumultuous economy and workforce. But does that mean they are money smart? Our finance expert Rubina Ahmed-Haq points out some money myths the latest generation still hasn't got sorted.
Myth #1: The Best Financial Advice is Online
Millennials are so used to using technology and finding everything online that they don't simply pick up the phone! Rubina recommends shopping around for an advisor and then scheduling a meeting. The value of face to face and building that relationship is something that millennials tend to forget.
Remember: an expected $30 trillion in assets will shift from Baby Boomers to their heirs in the next 20-30 years, so more financial advisors will be shifting their focus to this demographic.
Myth #2: You Have Your Whole Life to Save
Rubina told us that she often hears "you have your whole life to save," when in reality you also have your whole life to get into debt! With that in mind, don't wait to invest: start now, and don't be conservative, because you have time to watch the market go up and down.
To drive this point home, Rubina reminds us that if you start investing now at 25, and put $3,000 a year for 10 years, you’ll have $472,000 by the time you’re 65. But if you wait until you're 35 to start putting the same amount of money away for the same amount of time, it will only grow to $357,000.
Myth #3: Look For a Long-Term Gig
The world has changed so much in the last 25 years that staying in one career for too long is actually bad for you. Rubina recommends that millennials keep up with trends in their market and look for a new opportunity every five to seven years. You don't have to completely change careers, but add to the one you already have! Changing jobs frequently gives workers a broader perspective of their industry, because they become familiar with the inner workings of numerous companies. Employers also know that job hoppers are the 'new guy' on the team and work extra hard because they are perpetually in the first-impression phase.
Myth #4: Invest in Real Estate Sooner Than Later
Don't a house just because that is what your parents did. Buying a bricks and mortar house is very old school thinking! Just because housing prices have risen dramatically in the last 20 years does not mean the next 20 will see the same growth. Instead, rent and buy a property for investment.
Rubina says a good option is to live in a condominium and invest and buy a home that is for rental purposes only. That is the best way to grow your money!
Myth #5: Cash is Better than Credit
Paying with cash may help you stick to a budget, but it won't do your credit score any favors. And, since it's difficult to make a financial move without your credit rating being checked, your score can impact many things. Given that 35 per cent of your credit rating is determined by your payment history, using plastic to pay your bills is an ideal approach to establishing a record of credit — as long as you pay off the balance in full each month to avoid getting hit with interest charges and unnecessary fees.
Some credit cards also offer perks like airline miles and cash back, which can actually help you save money!