The young demographic aged around 15 to 34, known as Millennials, are becoming the next generation responsible for the future of Indonesia.

Dear Millennials, Here Are the 3 Biggest Financial Mistakes You Need to Avoid

JANUARY 19, 2018

The young demographic aged around 15 to 34, known as Millennials, are becoming the next generation responsible for the future of Indonesia. In 2020, millennials will be the largest demographic in Indonesia, making them a fundamental workforce for the Indonesian economy. Though, there isn’t much to be worried about considering millennials are generally well-educated and more literate in areas like technology. But on the other hand, they seem to struggle with financial issues, accumulating debt and not doing much in the way of saving money. What role can they play to help Indonesia’s future economy?

It could be too early to tell, but let’s spend some time to evaluate the biggest financial pitfalls the millennial might come across , and provide some practical know-hows to fix it.

Maintaining a lifestyle they can’t afford

Millennials tend to get caught in pursuit of a certain lifestyle that they can’t afford, resulting in a dependency on their credit card, accumulating debt over time to maintain lofty lifestyle aspirations. Needless to say, this is something that one should avoid.

On the other side, debt is not always a bad thing. With debt, you can also allocate funds for various needs, manage cash flow and develop a positive credit score. Unfortunately, in Indonesia credit cards aren’t very prevalent. Due to tight regulations and lack of data, many have had inconvenient experiences of being denied when applying for a credit card. Kredivo is here to solve this problem, giving you access to credit instantly.

Kredivo, a pioneer in instant digital credit card for e-commerce in Indonesia, allows you to buy now and pay later on 150+ reputable merchant partners such as Bukalapak, Lazada, Shopee, Blibli, and Kredivo offers several payment options; “Pay in 30 days” with 0% interest and 3, 6, 12 months installment without credit card with low interest of 2.95% per month. Remember to choose a tenor that suits your financial capability -- to avoid creating difficulties for you in the future.

Ignoring the 50-30-20 rule of thumb

Do you frequently run out of money in the middle of the month and ask yourself “where did my money go?” If the answer is yes, that could mean some adjustments need to be made to your budget plans.

You can avoid this kind of situation by creating a detailed budget plan at the beginning of every month. Use the 50-30-20 budgeting rule to align your expenditure with your saving goals. The numbers stands for 50% living essentials, 30% personal spending, and 20% saving and investing. Commit to spending only half of your monthly salary for your daily living expenses such as food, transportation, rent, bills, and other necessities. Another 30% for non-essentials like shopping for new clothes, or going out. The final 20% should be allocated towards savings, investments, and debt repayments.

Stay efficient by keeping track of your expenditure. This will make it easier to see where your money goes. You can also download a financial tracker app, or download and use Kredivo as a payment method when you shop online. Not only is the transaction process as easy as 1, 2, 3: 1 minute to apply, 2 clicks to buy, 30 days up to 12 months to pay back, but the most interesting thing is you can also manage all your transactions, check your credit limit on the app as well as pay your bills in one go, either online or offline, with real-time notifications.

Waiting to start investing

If wealth is the ultimate goal, one path to get there is through investing. The most common mistake millennials make is putting off investing until their 30s or 40s when they think they have enough money to do so. If it seems too risky, you can start with small investments like putting your money into mutual funds or gold. You can even start investing in mutual funds with as little as Rp 100.000. It might seem like a daunting step,and if you don’t know where to start, you can get help from a trusted financial advisor, who will tailor your financial plan to your future goals and needs or do some research online to find out more before making your first investment.