The Millennial generation, defined by Pew as those born between 1981 and 1997, has learned a lot in the past few years about money from Gen X and Baby Boomers.
However, there are still traps Millennials could fall into if they’re not careful. Check out these 7 money traps for Millennials to avoid.
Gym and fitness center fees
Health and fitness services are easy things for Millennials to spend their money, and it’s clear why. As with generations before, the gym is a social place for health-conscious Millennials: a place to meet new people, meet up with friends, and keep up metabolism before middle age hits. However, much like many social events (bars, clubs, etc.) gym memberships and fitness fees quickly add up.
According to Money Crashers, the average cost of a gym membership is $58, although that depends on where you live and what amenities your gym offers. Fitness centers with more amenities, like swimming pools, saunas, and specialized classes usually cost even more, or charge you a premium to access those “extras.”
Before falling into the trap of spending $50 or more on a monthly fitness membership, investigate drop-in rates, a “class pass” or Groupon deals. For example, say a monthly membership fee to a fitness center is $65 a month, but a drop-in rate for the one class you visit twice a week is $7.
$7 twice a week is $14 a week and, at 4 weeks, comes to $56 – saving you $9 on the monthly fee.
Also, don’t discount the power of the internet. While it may require a little investment (weights, for example) and some space, you can find a lot of exercise videos online, especially for weight training and bootcamp-type classes. No, it won’t replace the gym camaraderie, but it will save you money in the long run.
Many Millennials love their subscription services:
- and more,
but these services can really add up.
While $10 a month for a music or make up service, or $35 a week for meals delivered to your house, might not seem like much at the time, this really adds up – and do you really need it?
It can be very easy to justify subscription services, but really consider how you interact with these services. For Spotify – could you get by just as easily listening to YouTube on your phone? Sure, you may have to deal with ads occasionally, but in many cases, you’re probably able to tune it out.
Yes, your dog may love his Barkbox treats and toys, but do you need that $45 subscription, or can you occasionally go to the store or farmers’ market and pick up some organic treats and a sturdy toy once in a while?
Or consider a short term subscription: if you really can’t say no to trying the latest meal kit delivery service, subscribe for 1 to 3 months and see if you really need it. Chances are, you’ll realize cooking is cooking and you’ll save a lot more money just coming up with your own recipes instead of having them delivered at a larger expense.
Out of the ordinary dating expenses
In all likelihood, you are going to have to go out for food, or drinks, or something with your date. Let me know if you’ve ever met someone (and married them) without spending any money on them – I’d want to interview them!
Even though dating inevitably costs money, don’t fall into the money trap of spending money just to be with, impress, or otherwise woo your date (or, worse, their friends!) As Tiffany Broussard from Marriage Over Money learned, you shouldn’t have to buy something just to impress people. She states,
[I] bought a motorcycle to impress other singles and ended up terrified of the thing! I ended up with 2 cars and 1 motorcycle, all being financed at the same time… what a mess!
While she says it ended up teaching her something about her spending habits and how be a financially responsible wife, try to avoid
situations where you feel out of your comfort zone just to make a potential partner feel better.
Leasing and “trading up” every two years
This is one of the biggest money traps all Millennials should avoid: leasing cars and trading up every two years to get a newer, better car. Do you really need a new car every two years – or could you leave those expenses and restrictions (leasing terms can be onerous) behind?
While it depends on the type of car you buy, the average cost to own a car is $725 a month, according to NerdWallet.
That includes financing, so subtract the cost to lease or finance your car out of the equation (this assumes you paid off your car and now own it outright) – how much do you have left?
Let’s say your car payment is $400 and, after 4 years, you pay it off. Now your cost of car ownership is $325 a month ($725-$400). The
equation is a little simplistic because we can’t assume the cost of fuel or your auto insurance policy in the future, but still – your cost of car
ownership decreases by $400 a month if you decide to hang on to your car instead of leasing a new one every few years!
Get tips on how to buy a new car.
Buying new gear for hobbies
If you’ve picked up a new hobby in your twenties, chances are you probably need some type of gear. However, it’s not the time to buy brand new everything.
In the majority of cases, others have been interested in your hobby and have lots of extra gear they need to get rid of – so why not buy your “new” hobby gear at a discount?
Take camping and hiking – you may be tempted to buy the top-rated, best-insulated and best-suited-for–50-mph winds tent, but step away from the REI website for a second and think secondhand. Check out
- Garage sales
- Your parents’ and their friends’ garages
- Second hand hobby stores.
Chances are you’ll find a tent (and sleeping bag, beach chairs, and even a camp stove) in good condition at a fraction of the price of buying new.
Popular hobbies, like hiking, camping, and many sports are likely to have lots of options and, best of all, they’re probably gently used.
For all the people you know who are hard core campers, for example, how many are just occasional campers? And how many of those tents do you think really sustained 50 mph winds? While your $50 tent and camp chairs may look like they’re from the 1980s, they’ll serve you just as well as $150+ gear from the 2010s.
Health, beauty and stress relief promotions
If you spend any time on Facebook, you’ve probably noticed a lot of people promoting new fitness, health, stress relief or “age defying” products. In many cases, these can be multi-level marketing schemes or just your average “buy this product and feel better” promotions. In most cases, you don’t need them.
These types of health and beauty promotions have been around for years: think Mary Kay, and Proactiv commercials.
Nowadays, you’re more apt to find promotions for “reducing fine lines and wrinkles” and “increasing stamina and reducing stress”, but it’s just different words for the same things. Millennials, don’t fall into the same trap your parents warned you about – and definitely don’t sign up for automatic payments.
Melissa Berry from Sunburnt Saver learned the hard way when she tried justifying signing up for a massage promotion – $50 a month for one year. Says Melissa,
I didn’t realize I signed up for an automatically renewing payment plan so, when my year was up, I was shocked to learn they kept charging me. It took me another 4 months to get them to stop charging me because they wouldn’t take my calls and the manager hid every time I showed up in person to quit.
While this is a rather extreme outcome, it’s not unheard of – Proactiv recently reached a settlement for their unfair billing practices, among other issues. Be careful when signing up for automatic billing or recurring payments. If you don’t read the fine print or get details in writing, you could find yourself paying for these services long after you wanted them.
A new phone every two years
It is extremely tempting to get the newest phone every other year, or earlier depending on your carrier and its promotions. With cool new
features, you may feel left out of the loop while everyone else plays with their “sticker emojis”. Millennials, please don’t fall into the trap of buying a new phone every two years – it’s not worth it!
As much as we like to use our phones as mini-computers, as long as your phone receives calls, texts, and emails (if you have to link it to email because of work), you don’t need to spend hundreds of dollars to upgrade your phone.
If you’re running out of space on your phone, upload photos, documents, and emails to your Google or Dropbox account, or iCloud if you use iOS. That will buy you more time, so you don’t have to buy a new phone just for more space.
With the internet, Millennials and indeed all of us face a lot more money traps to fall into. Some of these traps can be very cloying too, especially when our friends are telling us to buy these products. However, avoiding these seven money traps will help Millennials save money and feel better about where their money is going.
How To Get Started Investing
The international bestseller by CERTIFIED FINANCIAL PLANNER™ Scott Alan Turner. Choose the right accounts & investments so your money grows for you – automatically. No jargon, confusion, or pie in the sky promises. Just a proven plan that works.