The most common money mistakes millennials make

We asked financial experts to answer the following question: What's the most common money-related mistake young people make?

Here are their thoughts:


"Young adults who get a handle on their budget often sacrifice savings for making larger payments on student loans and credit cards. Yes, reducing debt creates space for a comfortable lifestyle and a peace of mind. Yet, emergency savings are necessary to avoid bringing new debt into the picture. Also, young adults can take advantage of growing their retirement dollars when they start early. Having a longer time period to earn compounded interest (interest on interest) on retirement contributions encourages a favorable nest egg. The key is making some contribution to savings and retirement as you are paying down debt.

Young adults should also take advantage of free financial planning resources from well-known non-profit organizations, such as the Foundation for Financial Planning (FFP) and the National Endowment for Financial Education.  In addition to offering consumer-friendly financial education and tools, FFP supports pro bono financial planning engagements, such as Financial Planning Days®, where you can get free, no strings attached financial advice from a certified financial planner professional.


— Lazetta Rainey Braxton, founder/CEO of financial planning firm Financial Fountains and a registered investment adviser

";Neglecting or mismanaging credit is probably one of the bigger mistakes that young adults make. Your credit score is how so many people look at you and make a judgment about you. Note: Paying your balance on time reflects 35 percent of your credit score. Most people expect to have their scores looked at when applying for a loan or trying to get a credit card. But more and more, insurance companies and even employers are looking at your credit score. I've known a handful of people who received job offers only to have them rescinded after their credit history came back negatively.";

— Lee Baker, certified financial planner at Apex Financial Services, Inc.

";Living beyond means! Money-wise, there is an accumulation phase, then a preservation phase, then a spending phase. In the accumulation phase, younger people can take on debt, have too high a rent or mortgage payment, and find themselves always trying to catch up. That is financial disaster, and also emotionally stressful."; — Ted Smith, chartered retirement planning counselor UBS Financial Services Inc. of Baltimore

";Delaying creating a savings plan. Millennials have the single most important thing going for them to determine financial success - their young age! By saving and investing early, by paying yourself first, you allow the miracle of Compound Interest to work in your favor. It's amazing what a difference 5 years can make, comparing the results of someone who starts saving at 25 versus 30 years old."; — Jonathan Murray, managing director of wealth management at UBS in Hunt Valley

";Not starting to save for retirement soon enough."; — Barry Korb, registered financial adviser, Lighthouse Financial Planning, LLC in Potomac

";Not communicating with a creditor/lender when they find themselves unable to make payments on their accounts.

It's very important that right from the start addressing issues that you have with a car loan, credit card, cell phone bill, student loan, medical bill must be taken care of as quickly as possible.  How you pay directly effects your credit score. This is not the time to bury your head and hope it goes away. Maybe you lost a job, or had a reduction in pay and your budget no longer works. You will need to reassess your situation and look at the opportunities you have to get back on track.


This may involve some drastic life changes. Once you have been through a situation as this it will drive home the importance of having an emergency savings in place. Always pay yourself first."; — Nina Heck, director of counseling and client relations, Baltimore-based Consumer Credit Counseling Services of Maryland and Delaware Inc.

";Not investing! It's hard to prioritize when you're young and strapped for cash, but putting as little as $25 or $50 a month into an IRA in your early 20s is one of the best things you can do for your money thanks to the power of compounding interest.
Making investing a habit is how everyday people become millionaires, and the sooner you start, the better your chances."; — Dan Weliver, editor,

";Not starting to save for retirement early and not participating in their employer sponsored retirement plan. The earlier you begin to save for retirement, or save in general, the better!"; — Dominique Broadway, CEO and D.C.-based personal finance coach,

"Young adults should understand the importance of identifying short, intermediate and long-term goals. Short would include going on a trip in the next six months; intermediate as buying a new car in the next two years; and long-term as being able to retire by a certain age.

In order to meet these goals, they need to decide how they are going to use their current income to reach these goals. And goal setting should be reviewed and reset every six months because circumstances can change.

But perhaps one of the most overlooked mistake young adults make is not setting up a retirement account as early as possible, even at the age of 18. This is because interest that compounds over a longer time, such as thirty or forty years, results in saving a lot more money.


Often people are "short-sighted" in this respect, and think it is smarter to focus on this only after they've established themselves in a career, but when it comes to long-term savings, time is really important factor in achieving this."; — Mary Fortier, student financial services manager at Towson University