Three common financial mistakes millennials make and how to avoid them
Millennials aren't perfect when it comes to financial planning and wealth management.
That's according to Josh Jalinski, also known as the "financial quarterback." He's an author, radio host and the president of Jalinski Advisory Group. He points to three common pitfalls millennials make when it comes to their finances: using cash as a long-term investment, ignoring life and disability insurance, and not recognizing potential tax savings.
1. Keeping too much cash on hand
Jalinski believes millennials are too afraid of investing. He suggests that if you're 35 years old and have a 401(k), 80% of that money should be in stocks and the other 20% should be in bonds.
"Get your money off the shelf and invest it in equities," Jalinski said. "That's usually one of the best places for long-term growth."
2. Ignoring insurance
Only 10% of millennials have the life insurance coverage they say they need, according to a survey from New York Life.
You should get life insurance equal to the amount of years you plan on working, Jalinski said. He also suggests looking into disability insurance that will help cover you in case an accident takes you out of your job.
"You should get 30 times your income in cheap term insurance and make sure the term insurance is convertible to a good permanent plan," Jalinski said.
3. Not understanding how taxes can help
Jalinski notes that most millennials aren't investing "tax smart." That means they're not maxing out their employer's 401(k) and don't understand how a Roth 401(k) could save them tax dollars.
"Make sure you do your tax-deferred plan with the mind that maybe 20 or 30 years from now, we'll be in a higher tax bracket, not a lower one," Jalinski said.
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Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.