Beats by Dre: $300.
LouisVuitton Monogramouflage bag: $2,000.
Realizing you have frivolously spent all your earnings on impulse purchases: horrendous.
According to a recent research study by personal finance website NerdWallet, millennials will not be able to retire until the age of 73. The current age of retirement is 61.
A big problem for millennials, the generation born between the early 1980s and the early 2000s, is saving money and avoiding frivolous spending habits.
“It’s important to know where your money is going each month,” said Sophia Bera, founder of Gen Y Planning, a Minneapolis-based financial planning firm. “Track your money using Mint.com, YouNeedABudget.com or a slew of apps on the marketplace and it will help you get a sense of how much you spend.”
With the housing market reaching new heights, it is getting difficult for millennials to save enough money for a home or for retirement.
Some millennials who graduate college have high amounts of debt in student loans and put saving for retirement and a roof over their head on the back burner.
“I set up a strategy with my clients for which student loans they should pay off first, while simultaneously working towards other goals,” Bera said.
“A few recommendations while you’re in school: try not to take out private student loans because they don’t have as many repayment options as the federal loans, and I’ve seen people with private loans at really high interest rates.”
One problem in particular which millennials face is the temptation of a credit card with a high credit limit.
Sarah Lieu, an account manager for the debt collections department of Bank of America, said credit card companies want to give their services to millennials because they are unsure when and how much a credit card should be used.
“I would often see young people in debt,” Lieu said.
“Credit card companies are eager to offer credit to young people who have very little knowledge of managing such a big responsibility.”
Millennials are the generation of technology because they started using a computer at a young age. Every day, expensive technology is being introduced like smartphones, tablets and new video games.
Lieu said frivolous spending is what keeps credit card companies in business.
“Marketing has become very manipulative and intrusive and it is very easy to tell oneself that the indulgence is worth the price,” Lieu said.
“Debt is a hard thing to manage when money is literally spent on things you can’t even touch or give away these days like phone apps and music.”
Bera said the best way to defeat credit card debt is by paying them off with a job that has its income going toward the credit card.
After paying it off avoid credit cards all together.
“Don’t just pay the minimums on your credit cards, pay a consistent amount each month until your debt is gone,” Bera said.
“Pick up a second job like as a nanny, temp or tutor and do whatever it takes, keep it legal, to get out of credit card debt and stay out of it.”
Money can be tricky and can also be the greatest thing according to financial planner and La Verne alumna Renee Cabourne.
After graduating from La Verne, Cabourne became a certified financial planner, helping people get out of debt with her company Money Savvy Woman.
“Money is a weird thing; it destroys people but at the same time if you could figure out how to harness its power you can have anything,” Cabourne said.
“The people who figure it out wind up doing amazing things with it like helping people and solving world problems.”
Michael Saakyan can be reached at firstname.lastname@example.org.