January 24, 2012
Young Adults Adrift in E-Spending Ocean
Collectibles purchased online range from Russel Wright dinnerware (shown here) to songs and video. Source: backhomeagainvintage.
Credit cards and malls are so yesterday.
Young adults move easily among an array of online payment and shopping options unimaginable a decade ago: PayPal, Groupon, telephone bill payment, smartphone apps that pay for store purchases, online retailers galore, automatic bank payments, and online gift cards.
Technology is moving fast: Amazon recently released an app called “Flow” that will recognize a product — from a book to a jar of Nutella — and then send the price, user reviews and a “Buy It Now” option to your smartphone.
It’s time to take stock of how easy it has become to overspend and how difficult saving is for young adults weaned on e-transactions.
“When it doesn’t feel like money, people don’t treat it like money,” said Priya Raghubir, a professor at the New York University Stern School of Business, neatly summing up her 2008 paper, “Monopoly Money: The Effect on Payment Coupling and Form on Spending Behavior.”
It’s extremely hard for young adults to change their behavior, “because they aren’t used to any other way of paying,” said Raghubir, 48, who remembers the old paper-transaction days when cash was king and checks were reserved for the big purchases…Learn More
October 23, 2014
How Emotions Meddle with Money
Our 401(k) retirement system requires most workers to save for the future. But it’s difficult to reach this increasingly important goal, because our emotions – overconfidence, pleasure, fear of loss – get in the way.
“We believe our own nonsense,” is how Daylian Cane, a professor in the Yale School of Management, explains financial behavior in a new public television program, “Thinking Money: The Psychology Behind our Best and Worst Financial Decisions.” The short video above is taken from the program.
Further clouding our judgment are a vast array of consumer products, and the stress produced by how easy it is to purchase them with a credit card swipe and how hard it is to pay off the cards.
“Thinking Money,” a production of Maryland Public Television, covers many topics covered by this blog, including help for people trying to overcome their emotional obstacles.
“Thinking Money” is scheduled to air in its entirety on public television stations around the country in coming weeks. Click on “Learn More” for a list of broadcast dates in major cities. …Learn More
January 9, 2014
iPad Shoppers: More Likely to Buy?
A new study out of Boston College finds that e-shopping for products while grasping an iPad increases the feeling of ownership of that product – and may make you more likely to buy it.
The findings expand on a financial behavior issue explored in a popular Squared Away blog post about how the Internet has made it much easier to shop – and spend money. The new research distinguishes among the various technologies available to online shoppers and finds that the urge to buy may be even stronger when holding a touch screen device than when using a laptop or desktop computer.
The way this works is that the tactile experience of holding a product – whether taking it off the store rack or grasping the device that’s displaying it – imbues some sense of ownership, making it harder to give it up and resist buying it.
Here is an edited excerpt of an article explaining the research; the article appeared in Chronicle, a publication for Boston College faculty and staff. …Learn More
May 16, 2013
Our Mission at Year 2
The best place to invest, the coolest cash back rewards, the smartest or cheapest or lowest-rate mortgage – infinite spin ushers out of the financial world every day, and it’s all aimed at you.
That’s among the reasons the Center for Retirement Research at Boston College started this blog in May 2011. The blog’s focus is not financial products but financial behavior: what people do, why we do it, and how we can do it better. At its two-year anniversary, the Squared Away Blog hopes that it has become a reliable source of information for a growing number of readers of all ages who struggle every day to save and invest for their own or their children’s futures.
It’s important to explain to readers what “reliable” means for a blog housed at a university think tank. First, it’s about credibility. We are not selling anything. The blog is supported by a grant from the U.S. Social Security Administration, which has an interest in making sure Americans get good financial information.
Second, Squared Away routinely covers the latest research – our own or others – about financial behavior, or we use it to inform other articles you’ll read here. That’s because empirical research, which uses statistical analysis to figure out what’s really going on, is critical to understanding and tackling our personal finance challenges. …Learn More
October 2, 2012
How Smart Are Smart Phones?
Nearly half of people who have cell phones pay more than $100 per month for the service and 13 percent pay $200 or more, according to a survey by an online coupon company.
That doesn’t include the cost of the physical phone, the app and music downloads, the extra data plans. A certified public accounting organization in Oregon, Oregon Saves, estimates that the total cost for a two-year contract can easily reach $3,000.
And then there are the rogue teenagers who go over the monthly limits on minutes set by their parents’ cell plans – eventually, the parents relent and buy an unlimited data/text plan, which drives up their monthly charges permanently.
Wow, this habit is getting expensive.
The cell phone isn’t the only electronic habit that’s costing us. We also pay hundreds for cable TV, the Internet on our home computers, the land line. The automatic withdrawals for these services suck hundreds from our bank accounts each month – and we may not notice how much we’re spending since the transactions are electronic…Learn More
April 2, 2012
Young Adults Face Unique Money Issues
Many young adults right out of college are planning career moves or marriage – while grappling with complex financial issues.
Student loans weigh them down. And despite the improving job market, it’s still tough to find a job. Wages and salaries for those who are employed are stagnant in many industries. Thanks to the proliferating opportunities for e-shopping, young adults also face more temptations to buy than any previous generation.
“I feel like I’m definitely in the lion’s den,” said Eric Bell, who, at 28, is trying to get his financial education website for 20-somethings, YoBucko, off the ground. A former private banker, he is also looking for a job in his field, paying off student loans, and cheering on his girlfriend in her attempt to buy her first home.
Below are a few previous Squared Away posts written with young adults in mind. A link is provided at the end of each article’s title, or you can join the conversation on Facebook.
- Young Adults Adrift in E-Spending Ocean
PayPal, Groupon, smartphone apps that pay for store purchases, online retailers galore – technology has made shopping a breeze. Young adults unfamiliar with the old-fashioned cash economy may not realize how damaging electronic commerce can be to their budgets. …
Learn More
