Were you bad with money this year? You’re not alone

Nadia Vanderhall made some money missteps in her early adulthood that compounded and reverberated for years. Young and out of college, she accepted a low-paying customer service job without negotiating her salary. She didn’t understand how her 401(k) worked or how much she could contribute.

The final blow came when she got laid off with only two weeks’ pay, then suffered through a three-month backlog of unemployment claims as her bank account dwindled. Finally, Vanderhall raided her retirement funds — less than $10,000 — adding tax penalties to her already dire situation. But really, none of it was her fault. You don’t know what you don’t know, and her parents were unable to teach her because they didn’t have that knowledge, either.

“I learned from it, and honestly, that was the time where I took the notion to understand money, figure out how money works, understand what I did and how to course correct,” she said. “And then, when I did get my job at a major corporation, I went from making $10.71 on the hour to six figures.”

That was several years ago, and now Vanderhall coaches people on how to live within their means, save, invest and give. She won’t have to look far for clients: A new Harris Poll for Credit Karma reveals that 70% of Americans have financial regrets this year, largely because they didn’t save money. When you single out the Gen Z respondents, the number shoots up to 86%. More than half of all the respondents will carry debt into 2025.

Purchasing pitfalls

Housing, food, transportation, childcare and other necessities take up a chunk of most people’s budgets. Stir some social media into the pot, and folks spend even more as they strive to participate in lifestyle theater. The study also found that nearly half of Gen Z and 40% of millennials were prompted to needlessly buy items after following trends on social media. The top look this year, ironically, is “Old Money,” a fashion trend that emphasizes expensive, quality pieces and classic styles — not so much head-to-toe logos, but more tailored blazers, preppy vibes and subdued hues.

Among social media users, a whopping 79% of Gen Z and 70% of millennials have made impulse “hype purchases” of skincare and makeup, wellness products, electronics, alcohol, tickets, home décor, clothing and travel solely because a celebrity or influencer — usually compensated for leveraging their platform — encouraged them to. After the thrill of purchasing, most of those folks (81% and 80%, respectively) regretted spending the money.

Vanderhall’s weakness, she said, was the “it’s on sale and I deserve to treat myself” combo that drained funds she could have used during her unemployment.

From regret to reform

Nearly three-quarters of survey respondents were hopeful they can commit to better financial habits once the calendar flips to 2025. They want to save more, stop impulse buying, improve their credit and shore up an emergency fund.

The best way to make a change, though, is to understand what went wrong in the first place and the steps to take toward success. Do you need to get a roommate? A side hustle? Cut back unnecessary spending or up your rates? It’s easy to find advice about money, but harder to follow it, especially if you’re working with little or none. Vanderhall used her down time to research how to be better with money. A recruiter taught her how to negotiate her starting salary and what to ask for. She then had the fortune to work with a manager at her new job who taught her even more.

Vanderhall’s company, the Brands and Bands Strategy Group, is born from her experience and tailored for people who don’t have the funds to hire a high-cost advisor. One of the first things she teaches her clients is to plan for the worst-case scenario: “Even if you do not have three to six months of savings, having some is better than having none.”

She also teaches folks about negotiating severance, what to do if unemployment runs out and how to think about plans B, C and D when plan A doesn’t materialize.  

Being nonjudgmental is important in the process, she said, as is understanding the root cause of money trouble. “Behavior finance has helped me determine why I did what I did, giving myself grace, but also understanding how to go about in a different way.”