20-somethings aren't always as careful with their money as they should be.
I reached out to my coworkers and friends to see what they consider to be their worst money habits, and have highlighted the most common ones here.
Research shows that they aren't alone in their bad habits ... and full disclosure: I'm guilty of some of these, too.
1. Not saving enough — or at all
There's a difference between knowing you should save and actually doing it.
According to a USA/Bank of America Better Money Habits poll, about 20% of Millennials haven't started saving. While 69% have a savings account, most have less than $5,000 in it.
When it comes to saving, retirement contributions can be a great place to start.
You can contribute to your employer's 401(k) plan if it offers one — and if it matches your contributions, you'll want to seriously consider it — or you can look into other account options, such as a Roth IRA.
By having your contributions automated, either to your 401(k) before you get your paycheck or from your checking account to an IRA or Roth IRA once your check hits, you can stash away some cash without even noticing.
2. Not being educated about their student loans
The class of 2014 is the most indebted class thus far. The average class of 2014 graduate will be stuck paying off $33,000 in student loan debt.
With numbers as high as these, you would think students and graduates would be well aware of their debt. Turns out many of them aren't.
A report issued by the Brookings Institute found that 28% of students with federal loans reported having no federal debt, and 14% with federal loans said they had no student debt at all.
Student loan debt accrues interest, meaning the longer you take to pay it, the more you pay overall. Even if you need a while to make those payments, the sooner you start, the better.
Take some advice from a man who paid off $74,000 of debt in two years, or another in his mid-20s who paid off $81,000 in under three years.
3. Spending unnecessary money on the short term
When I asked my friends and coworkers for their worst money habits, they all agreed on drinks out and subsequent Uber and cab rides home. Many also admitted to frequent lattes and buying lunch every day.
Moderation is key, here. There's no problem with doing these things when you can afford it, but if you find yourself doing them all the time and feeling a little tight in the wallet, it might be time to find some alternatives — even those as simple taking the subway, walking, and packing a lunch.
Here's how I keep my expenses down while living in New York City.
4. Using credit cards to pay for bills and daily necessities
A survey conducted by the American Institute of Certified Public Accountants found that almost half of Millennials surveyed had to use their credit cards to buy necessities such as food, or to pay utility bills.
Just using credit cards isn't necessarily problematic, but if you can't pay the bill when it comes, you might be on a fast track to credit card debt.
Many people use credit cards to buy now, pay later, but it's not a smart habit to take on. Besides the fact that this mindset might allow you to essentially spend money you don't have, public utilities often charge higher fees for those who use a credit card as opposed to a debit card to pay bills.
If you find yourself unable to cover your necessary living expenses without relying on a credit card, it might be time to restructure your budget — or make one.
5. Not monitoring how much they spend
Not too long ago, one of my good friends said she really needed to start keeping track of her money, so I suggested trying the budgeting app Mint. She had never heard of it, but has since downloaded it and is now much more aware of where her money is going.
Not taking the time to really monitor their cash flow is a problem many young people deal with. One of my coworkers admitted to "not checking my bank account for weeks on weeks, living in denial, and just kind of hoping that there's money in there."
Budgets aren't one-size-fits-all, but there are a lot of resources available to help you create yours. Check out this seven-step budget, or the even simpler "power trio" method. If you're looking for inspiration, you can use the budget of a 25-year-old who's better with money than most people twice his age.
6. Not investing
According to a UBS Investor Watch report, today's 20-somethings are the most fiscally conservative generation since those born in the Great Depression.
Only 28% of millennials look at long-term investing as a path to success. A Bankrate.com survey found that only 13% of Millennials chose the stock market as their preferred way to invest money, while 39% chose cash.
The problem with a disproportionate amount of cash as an investment strategy is that your money is not working for you. While investing can be scary, it turns out that in many cases, the best investors leave their money alone. Take a look at some of these resources, which can help you to start investing or to become a more savvy investor.
7. Being too risky with investments
While many Millennials don't invest, the ones who do might be doing so a little too aggressively.
Data collected by investing app Openfolio shows that out of 2,500 of their users, those under the age of 25 are taking the most financial risk, but receiving returns three times lower than older users who aren't taking on nearly as much.
According to the Openfolio data, younger investors often buy stock in "favorite companies" and try too hard to win big fast.
This is in direct opposition to investing strategies recommended by experts such as Warren Buffett, who recommends putting money in index funds to grow it slowly and surely.
8. Not having enough insurance
When you're young it's easy to think you're invincible —but the fact is, you're not.
According to a survey from InsuranceQuotes.com, 18-to-29-year-olds are the generation least likely to have any type of insurance, including auto, renters or homeowners, disability, or life insurance. And only a quarter of that age group has health insurance — arguably the most important kind.
Under the Affordable Care Act, those without health insurance are fined for their lack of coverage. In 2015, the maximum penalty for an adult without health insurance is $325 (up from $95 in 2014).
The young adult's guide to affordable health insurance can help you figure out where to start.
9. Relying too heavily on parents for financial support
Just over half of 18-to-25-year-olds are receiving some sort of financial support from their family, according to a USA / Bank of America Better Money Habits poll. And there's 20% of those between the ages of 26-34 who are still getting help.
However, many feel that parents shouldn't have to provide money to their grown children. According to a study conducted by the Pew Research Center, almost half of those surveyed (44%) said it was not parents' responsibility to to give their grown children any sort of financial support.
Family members are helping with everything from cell phone bills, to groceries, to clothing, to car payments. This family even refinanced their home to help their son out of a mountain of law school debt.
Finding a job and creating an income is a necessary first step, but once you have a steady paycheck, there are some basic strategies you can use to start building wealth and breaking free of your parents' financial support.
10. Being overly influenced by how their friends spend
You've probably heard of "keeping up with the Joneses." Here's the 20-something version of that: basing decisions such as where to live, what to wear, where to eat, and what gadgets to buy on their friends.
A survey conducted by the American Institute of Certified Public Accountants found that over three quarters (78%) of 25-to-34-year-olds use their friends' financial habits to determine their own.
Be aware of friends who tempt or pressure you to spend too much money. Just because your friend can afford to buy the latest iPhone and live in a high-rent neighborhood doesn't necessarily mean you can, too. And besides, research has shown that if you and a friend both turn down an expensive purchase you can't afford, it will actually strengthen your relationship.
11. Being financially illiterate
A study conducted by FINRA found that only 24% of older millennials could answer four or five questions correctly on a five-question financial literacy quiz. That number dropped to 18% for people ages 18-26.
The most common response I get from friends when I tell them I write about personal finance is something along the lines of, "Awesome; you need to teach me how to manage my money!"
The more you educate yourself on financial topics, the less likely you are to develop bad money habits like the ones on this list. Make sure you know these basic money concepts first, and then check out some of the free websites that give sound money advice.
By: Sarah Schmalbruch
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Gerber Kawasaki Inc, a registered investment advisor and separate entity from LPL Financial. Please consult your investment professional before acting on any advice.