The top 10 mistakes millennials make with their money
by Paula Pant

Let's admit it: none of us are perfect at managing money. But our youthful financial decisions shape our lives more than we realize. Those student loans we racked up at age 18? We might still be paying them at 40.
Here are the top 10 mistakes that people in their 20s make with their money.

1. Running up huge debts

Student loans, car loans, credit cards: Most of us launch our lives overloaded with debt. Avoid holding a credit card balance and borrow for school judiciously. One rule of thumb: don't borrow more than your expected entry-level salary.

2. Not building an emergency fund

What if your car breaks down or you lose your job? Mom and Dad can't bail you out forever. A good emergency fund should cover 3 to 6 months of your living expenses.

3. Not planning for the (very near) future

Pop quiz: What do a wedding, a honeymoon, and a home down payment share in common? People typically incur these expenses during their 20s or 30s, but many don't consider these costs until they're imminent. Impress your future self: plan ahead.

4. Not being strategic about graduate education

Thinking about graduate school? Weigh the job placement rates and average starting salaries against your financing and student aid options to see if the math works out. Consider attending part-time, or finding research or teaching work, so you won't have to fall deeper into student loans.

5. Not having health insurance

You may feel invincible ... but you're not. If you don't have parent- or employer-sponsored health coverage, shield your wallet from worst-case scenarios. A low-premium, high-deductible policy is far better than nothing at all.

6. Not having long-term disability insurance

Your greatest asset is your ability to work. Buy disability insurance that protects you if you're incapacitated. Tip: a lengthy "elimination period" (time before you can file a claim) will help you score a lower premium. Just make sure your emergency fund can cover the gap.

7. Not saving for retirement

Two words: compounding interest. The earlier you start investing for retirement, the more your money will grow. Don't wait until your late 30s or 40s to begin investing. Start now.

8. Not grabbing their employer match

If your employer offers a retirement contribution match, maximize it. Otherwise, you're leaving "free money" on the table.

9. Not optimizing tax-advantaged opportunities

Think carefully about whether to invest in traditional or Roth retirement accounts. The difference between "tax-deferred" vs. "tax-exempt" can make a substantial difference down the road.

10. Investing too conservatively

Scared by the market meltdown? That's no reason to stick to an all-bond portfolio. If you invest too conservatively (or not at all) while you're young, you might not have enough for retirement. That's frightening.
Paula Pant
Paula Pant is an award-winning personal finance journalist who has been featured on MSN Money, Bankrate, Marketplace Money, AARP Bulletin, and more. Her website, Afford Anything , draws 30,000 visitors each month.

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Teachers Insurance and Annuity Association of America (TIAA) has sponsored this post for information purposes only. Paula Pant is unaffiliated with TIAA, College Retirement Equities Fund, and their affiliates and subsidiaries (collectively TIAA-CREF), and TIAA makes no representations regarding the accuracy or completeness of any information in this post or otherwise made available by her. Ms. Pant’s statements are solely her own and are not endorsed or recommended by TIAA.

The information is provided for informational purposes only and is intended to engage you in thinking about your financial planning needs. Of course, each person's results will vary based on various factors, including, but not limited to, the products or strategy selected. There is no guarantee that results similar to those portrayed will be achieved. Certain products and services may not be available to entities or persons.