Having more money is up there with “start eating salad” on everyone’s New Year’s resolution list. According to a Nielsen study, a quarter of Americans say it’s a priority for them in the new year. But just like that whole eating-healthy thing, you might think about starting a budget, but never follow through.
Loading...
That juice cleanse can wait. When it comes to your money, though, it’s crucial to start really saving money and budgeting, especially right now. Twentysomethings are the most educated generation in American history, according to the Pew Research Center. But they’re also the first generation in modern times to be worse off financially than their parents and their grandparents were at their age. Because of the recession, young people have to work way harder to get their finances in order early so they have enough to retire on later in life.
Despite the data, don’t get intimidated. Because you’re starting young, making a few small financial changes can have a major impact on your future finances. Here are seven mistakes that you can avoid in 2016 to save your wallet from some serious stress.
1. Don’t splurge as soon as you get your hands on cash.
Ever wonder why you always want to blow your tax return on shoes? According to a study from MIT, it’s all in your brain. When you suddenly get more money, the reward centers in your brain light up and make you feel invincible. It’s the same brain system that gets activated by food and cocaine. And just like a chemical high, your financial high comes crashing down once you’ve spent too much money on stupid stuff. “What makes people happier is not actually splurges,” says Teresa Ghilarducci, professor of economics at the New School for Social Research in New York. “What makes people happier is steady increases in living standards and control over their money.” So instead of seeking the temporary high of a designer handbag, save or invest the money so you can eventually move out of your tiny apartment. It might not feel awesome now, but it will later.
