Millennials are always catching flak from older generations.  The top complaints are they’re lazy, entitled and can’t afford to buy a house because they’re too busy buying avocado toast.  While that’s not entirely true, some millennials are making poor financial decisions that are holding them back.  Here are their top 6 money blunders and how to fix them.

Trying to keep up with your peers

Social media has a funny way of making people believe that living a normal life isn’t good enough.  When you see people your age constantly traveling, shopping and doing all these over the top things, you may want the same for yourself.  But don’t believe the hype.  People only show you what they want you to see.  They may be living paycheck to paycheck or maxing out credit cards to afford their lifestyle and you’ll never know.  Instead of going broke trying to keep up, stick to living within your means.  To do so, you’ll need to create a budget and track your spending.  When you know where every penny is going, it’s easier to understand what you can or can’t afford.  If you find that your spending is out of control, start eliminating nonessential expenses until your budget balances out.

Failing to save for the future

No matter how lucky you feel, something’s bound to go wrong when you least expect it.  Protect yourself from financial hardship by building your emergency fund.  This way, if your luck runs out which it eventually will, you’ll have a safety net to catch you.  Aim to save a portion of each paycheck until you have at least six months’ worth of living expenses in the bank.  Start small but be consistent and eventually you’ll reach your goal.  An easy way to stay on track is to put your savings on auto-pilot.  In other words, set up automatic transfers with your bank.  Just tell them the amount you want transferred from your checking to savings along with the frequency and you’re done.

Not checking your credit

A recent LendEDU poll revealed that almost 21 percent of millennials have never checked their credit before. That’s ridiculous. It doesn’t matter who you are or how much you make, everyone needs to monitor their credit.  By doing so, you’ll be able to catch mistakes or fraudulent activity before it gets out of control. You’re entitled to a free copy of your credit report from each of the credit bureaus (Equifax, TransUnion and Experian) every 12 months.  A smart way to keep tabs on your credit year round is to space out your requests.  You can download your report from Equifax today, TransUnion in four months and Experian another four months after that.  Or whatever order floats your boat.

Taking on too much debt

With college tuition being so expensive, many millennials find themselves buried in debt before they even get their degree.  Throw in rent, car loans and credit cards and it’s easy to see why so many people are crying broke.  If you’re going to borrow money, do it wisely.  Here are some rules of thumb that will prevent you from taking on too much debt.

  • Student loans – Don’t borrow more than you expect to earn during your first year on the job. To determine a safe amount, research the average salaries for entry-level positions in your desired field.
  • Car loans – Use the 20/4/10 rule. Put at least 20% down, finance for no more than four years and keep your monthly payment under 10% of your gross income.
  • Credit cards – Avoid using more than 30% of your credit limit.  Always pay your full balance by the due date to avoid interest and late fees.

Putting off saving for retirement

When you’re just getting your career off the ground, retirement is the last thing on your mind.  After all, it is decades away.  But that’s exactly why you need to get started now.  This will give your money ample time to grow with the help of compound interest.  Plus, the more you contribute now, the less you’ll need to set aside later to build a healthy nest egg.  This will come in handy when you buy a house or start having kids and can’t afford to contribute as much to retirement savings.  Aim to max out your retirement account while you can.  This year, the maximum you can contribute to a 401K is $18,000.  For an IRA, the contribution limit is $5,500.

Need a little extra motivation?  Your retirement contributions may help you snag a bigger refund at tax time.  Remember, the fastest and easiest way to do your taxes is with ezTaxReturn.

Skipping insurance coverage

Paying for your own health coverage isn’t cheap. According to eHealth, the average individual health insurance premium through Obamacare is $393 per month. That can be a hard pill to swallow when you’re trying to juggle your bills and still have a life. Although skipping coverage can provide some wiggle room in your budget, it can come back to bite you. A quick trip to the ER can easily cost $1,000 or more for uninsured patients.  Even if you make it through the year without getting sick or hurt, you’ll still face the consequences when you do your taxes. The penalty for not having full year coverage is 2.5% of your household income or $695 per adult ($347.50 per child), whichever is higher.  If you’re looking to save money, find another way to cut corners because skipping coverage isn’t worth it.

By the way, if there’s someone that depends on you financially whether it’s your kids, spouse or parents, you also need to get life insurance.  There have been too many instances where someone dies and their family has to turn to GoFundMe to raise money for funeral expenses and debts left behind.  We’d all like to live forever but the reality is we won’t so make sure your loved ones are taken care of when the time comes.  Consider getting a policy that’s at least 7-10 times your annual salary depending on your family’s needs.