Your 20s and 30s can be an amazing time of planting roots, exploring new places, and self-discovery, but it can also bring its fair share of challenges.
Especially if you didn’t grow up learning about money and personal finance from parents or school, early adulthood could feel like a crash course on everything from home buying to investing for retirement.
And with so much to learn, it’s easy to find yourself leaning into harmful misconceptions.
Today we’re tackling 3 millennial money myths that need to be busted once and for all. Let’s get into it.
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Myth #1: Investing for retirement can wait
This might be one of the most important myths to bust, not just because it’s not true, but you can wind up seriously missing out when you’re older.
It’s extremely easy to fall into the kind of procrastination thinking that says, “I still have plenty of time.” “I’ll start saving and investing next year”.
But here’s the thing: the earlier you begin investing in a high yield savings account and retirement fund, the more time your money will have to grow – and the less you have to worry about contributing each month.
Compound interest is a fantastic tool for growing your investments, and the longer period of time you have for that money to grow, the more money you’ll end up with. What’s more, it’s never too late to start saving/investing your money.
As long as you continuously put aside a portion of your income (15-20% is a good number to start at) each month, you’ll be on the right path toward hitting your retirement goals.
Another related misconception that has cost people over a trillion dollars is that employers keep your 401k money after you move on to a new role or that you can’t transfer funds from one account to the next.
Remember that any personal contributions you make to your 401k are yours to take with you when you move between companies. Money earned from employer matching can sometimes be another story, so don’t forget to double check if you plan to leave your job.
Don’t lose your hard-earned retirement money to false information or forgetfulness – your future self will thank you.
Myth #2: You have to sell your soul to make good money
We’ve all heard the adage, “if you love what you do, you’ll never work a day in your life.” But as many of us know, sometimes following your hobby or passion doesn’t exactly pay all of the bills in those first few years.
But that doesn’t mean you have to shell out for a big corporation your entire life to make those big bucks.
Bernadette Joy from Crush Your Money Goals offers a great perspective here, saying, “I want to debunk the myth that you have to sell your soul in order to make good money! You know what’s wild? I made 200k this year learning things I enjoy and then telling people what I learned.”
Building your own business isn’t easy, but there is good money to be had in whatever skills or passions you’re “obsessed” with, as Bernadette says.
And if you have to take on another part-time or full-time role while you’re growing it, that’s okay too. As she explains, you should be treating your corporate job as your side hustle – something that will help propel you toward doing something you genuinely enjoy.
If you want to grow your own business – or find a job you truly love – know that you can absolutely do it and make a good living.
Myth #3: You need 20% down to buy a home
Buying a home is one of (if not the biggest) purchases you’ll ever make in your life – yet there are so many money myths about the whole process. From how much to save to hidden costs to look out for, there can be a lot to learn if you’re not already well-versed in the process.
As home loan officer Rebecca Mangopoulos explains, one of the biggest misconceptions new home buyers make is assuming they need to plan to put 20% down.
“A lot think they need 20% down on a new home – and that’s definitely not true! You can do as little as 3% down and get into a home a lot faster instead of watching the market drive prices up – making that 20% down a fast moving target,” she notes.
There are many loans out there for prospective buyers that will help you buy a home without having to put as big of a payment down. The trick is to take the time to shop around, do some math, and consider the pros and cons of a smaller down payment.
Even though purchasing a home is a significant investment, many people (not just millennials) forget to search around for a percent down rate that’s right for them. For example, you could get an FHA loan for 3.5% down or find one for as little as 3% down, as Rebecca mentioned.
Still, do the math and weigh the pros and cons. If you decide to pursue a loan with a lower downpayment, you’ll likely end up having to pay for private mortgage insurance (PMI), which can come out to an extra couple thousand a year.
At the end of the day, though, it can pay to know you have options!
Ready to make 2022 your best financial year yet? Propel yourself forward and make some serious money moves with the guides and resources on the Find More Balance blog!