4 Worst Mistakes Millennials Can Make With Money — and How To Avoid Them
Written by
Kerra Bolton
Edited by
Cory Dudak
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From skyrocketing housing costs to student loan payments, millennials face a unique set of financial challenges. While they are among the most educated and financially proactive, missteps like delaying retirement savings and mismanaging debt could quietly erode their financial security.
GOBankingRates consulted with financial experts to determine the four worst mistakes millennials can make with money — and how to avoid them.
Not Prioritizing Debt
Many millennials started their financial lives during the 2008 financial crisis, which has shaped every hurdle and milestone since then.
“The biggest mistake I consistently see is not prioritizing becoming debt-free and staying debt-free,” said Robert Persichitte, an affiliate accounting professor at the Metropolitan State University of Denver.
“Millennials have more education than any other generation and pay for it with hefty student loans,” he went on. “Often, when a millennial pays off debt, they look for some new debt to acquire, like a bigger house or a nice vehicle.”
Christopher Stroup, founder and president of Silicon Beach Financial, said millennials should focus on meeting their financial goals instead of overspending on discretionary items like dining out or entertainment.
“Failing to prioritize your long-term goals and living paycheck-to-paycheck often restricts financial growth,” Stroup said. “By tracking your expenses and cutting unnecessary costs, you can build healthier financial habits that will lead you towards financial security.”
Becoming House Poor
According to an Experian study, millennials owed $5.2 trillion in debt in 2024, up by 5.3% from the previous year. Most of the average debt load ($312,014) was for mortgage payments. “That’s in no small part due to sharply higher mortgage rates that were unfortunately timed to when most of these consumers were buying their first home,” the Experian study stated.
In addition, millennials who bought a home in 2024 paid a much higher mortgage rate than homebuyers who purchased their house earlier.
“One of the biggest mistakes I see millennials making is becoming ‘house poor'” said Taylor Kovar, founder and CEO at 11 Financial. “The bank might approve you for a bigger loan than you can actually afford, and while that’s tempting, you need to think about the extra costs that come with owning a house.”
Kovar said millennials should also consider insurance, utilities, maintenance and property taxes when they buy a home. “So, if most of your paycheck is going to cover your mortgage and those other expenses, you’re not leaving much room for savings, investments or fun,” he explained.
Delaying Retirement Savings
A Goldman Sachs study found that millennials struggle the hardest among the generations to juggle competing priorities such as student loans, child care and rising housing costs. Managing these competing costs could impair or delay saving for retirement.
“Saving to a tax-deferred retirement account is the single best and easiest way to retire at a reasonable age and stress-free,” said Doug Carey, a Chartered Financial Analyst and founder of WealthTrace, which offers consumer retirement and financial planning software.
“There is a huge difference between starting savings at age 25 vs. 35,” Carey explained. “If a 25-year-old started saving $20,000 per year for 30 years at an 8% annual return, she would have $2.5 million saved at age 55. But if this person instead started at age 35 and saved until age 55, she would only have $980,000 saved.”
Carey said delaying retirement savings could cost millennials thousands due to compound interest.
Not Having a Solid Financial Plan
Vince DeCrow, a millennial and founding principal at RISE Investments, said many millennials assume having a financial plan is only for the wealthy or those nearing retirement.
“The biggest investment misstep I see millennials making is operating off of non-professional investment advice they obtain from mediums like social media,” he said. “It often results in the lack of diversification and over-concentrating their investments in just the hottest and shiniest opportunities that social media peers suggest, such as crypto and meme stocks, for example.”
“Much of this is driven by the psychological fear of missing out,” DeCrow explained further. “Creating a comprehensive financial plan can significantly improve a millennial’s financial well-being and guide them with step-by-step actions to get any debt paid off, start building their wealth and achieve their long-term financial goals.”
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