7 money mistakes millennials tend to make

Forget spending too much on avocado toast, here are the money mistakes you could be making which can actually harm your future

There’s no shortage of people telling us why millennials are having a tough financial time. They have degrees but so does everyone, they take an abundance of holidays and they even buy too many avocados to smash on toast according to one outspoken property mogul.

Of course, if you look into the issues faced by millennials, you could argue the struggles they face are by no means their fault, having come of age during a really tough and unusual economic period.

But that doesn’t mean that we aren’t guilty of making some bad decisions. We take a look at the most common money mistakes millennials make and how to steer away from these bad habits.

Millenials chronically undervalue themselves. They might get portrayed in the press as narcissists who take too many selfies (presumably with their avocado toast) but they actually risk being too humble for their own good.

A study carried out by Leadership IQ and reported by Forbes shows that millennials routinely scored themselves low for many key workplace skills.

Humility is a virtue, sure. But it won’t help you get a pay rise or promotion at work. Don’t sell yourself short; it’s literally costing you money.

While younger people are actually more likely to openly discuss information like their salaries, when it comes to debt it's all still a bit taboo.

And it's perhaps no surprise that's it's difficult to talk about any real money problems you may face, such as debt, when you risk getting labelled as 'snowflake' if you do speak out. Trouble is, not discussing your finances can make it even more likely you’ll struggle and fall into debt.

But if you're struggling with your credit you don't have to go through it alone. There are a number of organisations you can go to for free help and advice such as the debt charities StepChange or National Debtline. They'll be able to work with you to help you tackle any debts.

Don’t worry, we’re not about to tell you that if you simply stop buying a coffee on your way to work you’ll have saved enough to buy a house in a year. What really matters is knowing how much money you have available to spend on stuff like coffee.

With huge increases in general costs of living, it's even more important to have a budget, as you'll probably be working twice as hard as your parents did just to get by, let alone to save.

That's why it’s essential to know where your money goes each month, so you can make sure you're not frittering it away on stuff you don't really care about.

Work out what your monthly income is, what your bills are, and how much you need to save. Then you’ll know how much you have left to spend on the stuff you enjoy - whether that is genuinely your morning coffee or a trip away.

It’s key to staying out of debt, having some money to save each month and not running out of cash before payday. There’s a good budget planner available on the Money Advice Service website.

We know it’s tough out there. Wages are stagnant, inflation is high and living costs are through the roof. These are all part of the reason that, according to YouGov, four out of ten 18 - 34 year olds have no pension provision.

But it’s worth thinking about as soon as you’re working. Or else, you may not be able to afford to buy Werther’s Originals for the grandkids, let alone all the travel and fun you’re probably imagining.

If you have a full-time, permanent job, your employer is legally require to automatically enrol you into a workplace pension scheme. Although you can opt out if you choose to, auto-enrolment is said to be making all the difference to the financial future of millennials. So if you have opted out, now may be a good time to rethink.

If you’re a freelancer then you may want to start paying into a private pension scheme.

It might seem like cash coming out of your wages and going nowhere each month, but it’s actually the opposite. You don't have to pay tax on your pension contribution, and if you have an employer they have to contribute something too. Whatever your situation, your pension allows you to grow your money even if you can't enjoy it for a few years. So it pays to get your pension sorted now so you don't miss out.

This one comes back to the fact that for lots of young people, their financial situations are pretty squeezed, making it hard to save. And short of a whole new career change (or moving countries), there's not always a lot you can do about this.

But if you don’t have some savings stashed in an easy access bank account then you have no money to turn to in an emergency. That means if your car breaks down or some other disaster strikes, you don’t have much choice except to put it on credit. And unplanned borrowing like that can risk becoming a debt burden you struggle to pay off.

Even if money’s tight, try to set aside a small amount each month. It really doesn't matter how much, it's more about getting into healthy habits. It will soon add up and even a small amount of savings will give you an extra safety net.

Plenty of millennials move home while they save up money to buy their first home or build their careers. A study by Aviva says that 1.23m people aged between 25 and 34 live with their parents, up from just over 900,000 in 2007.

If that’s you then make sure you’re still building a good credit record. That doesn’t mean getting into debt, but rather making sure you have bills in your name and perhaps using a credit builder card that you use and clear in full each month to build up your score.

Otherwise, when you leave home and want to apply for a mortgage or even rent somewhere, you may find your credit score holds you back.

No one wants to think about bad things happening, but it’s often worth spending a bit of money now to avoid being in an awkward (and expensive) position in the future.

There are a host of different types of insurance you could take out – it all depends on what your priorities are and what applies to you.

The most common policies you may already have are home and contents insurance – in fact lots of us start with these at uni. But with your growing responsibilities it could be worth seeing if you need to put other types of protection in place – for example, critical illness, income protection cover and life insurance to protect your loved ones.