Bankruptcy in the US is on the rise and millennials are facing financial dangers. Having grown up in a technological era and facing unstable economic situations, millennials often struggle to save money. To many, having a credit balance isn’t an issue, however, that does not mean you can’t save up. Here are some of the financial dangers you should avoid.
Using Credit Cards for Luxury
Luxury is good, and once in a while, it is okay to treat yourself. However, most millennials face the danger of using their credit cards to treat themselves to life’s luxuries. It is advisable to use cash for such things. However, if you cannot afford it, then look for an alternative. You will need to maintain good credit scores. Therefore, preserving your credit card is vital.
Placing Students Loans Before Saving for Retirement
Most young people are facing a massive debt which comes in the form of students loans. As much as it is necessary to repay this loan, it is much more advisable to save up for the long-haul. The percentage on student loans is typically around 6%, which is a pretty good rate.
Millennials instead should consider paying down debt with higher interest rates and investing in retirement funds and traditional stocks.
Lack of Investment Knowledge
Unlike the older generation, millennials do not have in-depth knowledge when it comes to making investment decisions. They tend to be more conservative investors. It is not easy to find a young person investing in places like the stock market. Therefore, they are more prone to encountering bankruptcy at some point in the lives.
Living Beyond Their Means
Living beyond what you can afford is the most common danger among the young generation. There is a need to outdo each other which results in overspending. This generation spends too much time on luxuries such as fancy cars and hitting the clubs every chance they get.
Such care-free behavior does not only affect their finances, but may also affect their well-being.
Life-changing emergencies, such as a medical complication or major auto accident, can have a profound impact on your finances. Millennials should be sure to have medical insurance, car insurance, and a nest-egg saved up for emergencies.
If you are unfortunate enough to be involved in a serious auto accident with medical injuries, you may want to consider hiring a car accident attorney to avoid a major financial dangers. Most injury lawyers will work on a contingency basis, which means they don’t get paid unless they settle or win your case. This means even people with modest means can afford an attorney.
Avoid Financial Dangers and Pitfalls
Some people have attributed the financial dangers millennials face to the ease in accessing loans. The lack of financial education among this generation is also disconcerting. However, millennials can avoid these problems by realizing that they will not be young forever.