Stephanie Barnes
There are things in life that you have to experience to grasp the lessons they have to teach. However, when it comes to money matters, it might be best to take the advice from those who are older and wiser. You definitely don’t want to go through the experience of losing your money or creating debt when it could easily be avoided.
With that in mind, Millennials are sharing money lessons, so younger generations won’t make the same mistakes.
The answers were pulled from the BuzzFeed Community. Millennials are warning Gen-Z about bank fees, explaining the best way to pay off debt, and even breaking down retirement plans.
Here are 21 things Millennials want Gen-Z to know about money and beyond.
1. Start investing ASAP
Once you start making and saving money, INVEST. Letting it sit in a savings account is actually letting it lose its value, because the interest you earn in those accounts is pitiful and absolutely NOTHING compared to rate of inflation. The value of the dollar is going down, so the money I made 10 years ago and ‘saved’ for the future buys less than the same amount today.
2. Let’s talk about high-yield savings accounts
High yield savings accounts more often than not have balance requirements. If these requirements aren’t met, the bank will charge you a monthly maintenance fee. Make sure you read and understand the fine print when you open ANY bank account.
3. Roth IRA
Invest for retirement in a Roth IRA. Money going in is taxed, but it comes out tax-free. There are contribution limits and early withdrawal penalties. Because you earn less in early years, your tax rate is lower. You can contribute to both a 401(k) and a Roth IRA. Which one to prioritize depends upon your individual situation.
4. The Debt Avalanche Method
As someone who works at a bank, I suggest the avalanche method to SO MANY PEOPLE looking to pay off their debts. It actually makes a huge difference, and while interest isn’t everything, paying down your highest rate can really impact you for the better.
5. Or the Snowball Method…
Or try the snowball method. List your debts by balance. Pay the lowest balance first, by adding the extra you can afford on top of all your minimum payments. Once the lowest balance is paid off, take the extra and the minimum payment of the first debt, and snowball that into your next lowest balance debt. You’ll be able to pay off low balances more quickly. I was taught this method by a national speaker and multi-millionaire real estate investor. I paid off $40k in debt in three years doing this. Line it up in a spreadsheet if you don’t believe me.
6. Student loan tip
If you’re currently attending college, or will be in the future, and have to get student loans, check with your financial aid office to see if you are able to reject some of them. If $10k will cover your tuition/fees/dorm/etc. and they offer you $15k, see if you can reject the extra $5k unless you REALLY need it for rent or bills. Would it be nice to have? Absolutely. Will it suck to have to pay off more down the road, plus interest? ABSOLUTELY.
7. Bank fees
Don’t pay fees to banks, and score benefits when you can. There are so many credit unions and online banks with easy-to-avoid fees, overdraft protection, and even things like legit interest (0.5% interest on a high yield savings online vs. .00001% from brick and mortar). Shop around and bank with someone that won’t bleed you dry.
8. Jobs + Education
Look for jobs that will help pay for your education. I got a job in a call center for a large insurance company at 19. They paid up to $5,000 a year towards school at the time. I stretched out my education over a few more years than the traditional four years, but I saved so much money.
9. Credit cards
Here’s a tip I wish I learned in my early 20s. Any and every time you get a raise at work, notify your credit card companies. Usually, if you’ve paid on time and have a relatively low balance, they’ll increase your credit limit. Don’t use it! Having larger credit limits lowers your credit utilization ratio, which will increase your credit score super fast, especially as you pay off debt over time.
10. Get your money’s worth!
Do the number amount method. If you bought a top for $20, you have to wear it at least 20 times to get the value for the top. Same with any other item of clothing. Get your dollar a day worth in your clothes.
11. “Getting a 401(k) match is HUGE…”
It’s free money. If your employer offers a 5% match, that is the same as getting an instant 5% raise. You just have to take it in the form of retirement savings, and contribute the same percentage out of your paycheck. But it’s still free money. Don’t leave free money on the table!
12. Buy used
If you get a vehicle, buy used. If possible, save your ass off and buy it outright. The interest on payments can really screw someone. Also, anything you’re actively making payments on can count against your debt-to-income ratio, which can lead to a higher down-payment on a house, for example. Car insurance rates tend to be higher if you don’t actually own the vehicle as well.
13. Avoid lending
My Dad always told me, never lend money. If you have it to give, give it as a gift. If you don’t have it to lend or it hurts you financially, don’t lend it. Friends and family will fight over money, and it ruins relationships. It’s worked for me my whole life.
14. “Get a credit card with points or cash rewards…”
…and never ever leave a balance. I have never seen a credit card bill. I go into the app every few days and pay the entire balance. It just takes a few seconds. This makes my credit score awesome and also gives me a few free dollars every month. Do not ever use your credit card to finance anything. Pay it off every day if you need to. Definitely check it every day. And you’ll see pending charges instantly in the app.
15. “There are three options most people have when they need more money…”
1. Spend less 2. Increase income 3. Spend less and increase income.
16. Understand interest rates
Understanding interest rates, in general. For savings, interest adds to your account. Understanding APY and compounding can help you save more money. For loans, understand the interest rates and how much of your monthly payment is interest, especially for student loans. For some, interest accrues daily; sit down with your bills and figure out how much of the monthly payment is interest vs. principal.
17. Stay with mom and dad
Definitely don’t be afraid to keep living at home if possible. My brother has over $30k in the bank at 23 because he still lives at home! When he’s ready to move out on his own, he will easily be able to buy a house and still have plenty of savings left over!
18. Get receipts!
Get receipts for your rent if you pay in cash.
19. Check out investing apps
I’m SO glad I signed up for investing apps like Acorns early. Choose a service, and go for it. I like Acorns a lot because it does your normal round up thing, but then invests that into stocks, bonds, etc. Plus, they have an option to also start saving for your retirement as well.
20. Grocery tip
This is a small thing, but it really adds up in the end: When you’re grocery shopping, just buy the store brand of whatever you were going to buy. 90% of the time it’s the same as the name brand.
21. Avoid payday loans
NEVER EVER EVER EVER take out a payday loan. Once you are in that cycle, it’s very hard to break, because of the very high interest rate. Borrow from friends or family, work overtime, just don’t do it. I paid all mine off, but they are still haunting me because of a payday loan hacking scam that happened about 10 years ago, and my contact info was sold in that scam. So I get threatening calls once in a while about ghost debts that don’t exist.
