Solutions to Make Better Decisions with Your Taxes and Money

5 Money Lessons for Millennials Other Generations Can Learn From

5 Money Lessons for Millennials - TaxACT

Generation Y has been called lazy, entitled know-it-alls.

But the harsh reality is that this generation also graduated into one of the toughest job markets with some of the highest student loan debt, so they’ve had to be scrappy to find their financial footing in an uncertain economic climate.

As a result, today’s twenty and early thirty-somethings have largely eschewed purchases that previous generations consider a rite of passage and have forged their own way in the job market.

Of course, there are exceptions to these generalizations, but in broad strokes, here are five money lessons for millennials that other generations can learn from.

5 Money Lessons for Millennials - TaxACT

Invest in your personal brand

Many Millennials have watched parents or other relatives receive pink slips after decades of loyalty to one company.

After seeing two recessions in their young lives, they don’t expect to retire with a gold watch for 30 years of service to one company.

Instead, they’re embracing the side hustle—perhaps selling jewelry, creating a tutoring business or freelancing on the weekends—and building their personal brand through blogs, networking events, social media and more.

This mentality will help them bounce back from lay-offs or other setbacks and it reduces their reliance on a single company for income.

Minimize housing costs

Housing is the largest line item in most people’s monthly budgets.

Keep that cost to a minimum—perhaps by living with roommates, moving in with Mom and Dad, or choosing a less expensive city—can help free up funds for student loan payments, savings or other categories.

The New York Times recently reported that one in five people in their 20s and early 30s are currently living with their parents.

Meanwhile, a recent Trulia survey found that 18-34 year olds and those over age 55 were the most willing to downsize in case of a financial hardship, while 34-55 year olds were least willing.

Many people in that middle group may have kids and a mortgage, which makes downsizing harder, but still not impossible.

Rethink ownership

Generations of Americans have purchased houses and cars because “that’s just what’s done.”

But many Millennials are questioning these assumptions and choosing to spend on experiences rather than McMansions and Mercedes.

Several studies show that fewer young people buy cars—or even have a driver’s license—compared to previous generations.

Without a mortgage or a car payment, Millennials have greater mobility and financial flexibility. And when they need a set of wheels, they can always ride a bike or use a car-share service.

Embrace innovation

Millennials are extremely comfortable using apps, posting on social media and communicating online.

This grasp of new technology makes these digital natives marketable as job candidates and means that they’re taking advantage of new ways to monitor their spending or pay bills in real time.

This means they can easily stay on top of their finances using a smartphone, but it’s important for people of all ages to password-protect their phone and avoid over-sharing on social media.

Failure to do so could lead to potential fraud or identity theft.

Save for the future

Two recent studies show that Millennials are saving money for the future, which is a very positive behavior, given rising long-term care costs and the uncertainty of Social Security.

On the flip side, though, few younger workers take advantage of the tax benefits and employer match of a retirement account and many are keeping savings in cash rather than investing.

Setting up an IRA or participating in a company-sponsored 401(k) or 403(b) would help these young workers save even more efficiently.

Tell us!

Can you relate to any of these lessons? What would you add?

TaxAct makes preparing and filing your taxes quick, easy and affordable so you get your maximum refund. It’s the best deal in tax. Start free now or sign into your TaxAct Account.

Photo credit: Joel Bedford via photopin cc

About Susan Johnston

Susan Johnston is freelance writer who's covered personal finance and small business for publications including Bankrate.com, The Boston Globe, Entrepreneur.com, Learnvest.com, and USNews.com. Follow Susan on Twitter.

Take the pledge and enter for a chance to win $10,000!