OK. There is just no nice way to put it.
All those smart apps and smart phones and clever financial programs that let you move money, buy stocks, and check your account balances on a teeny tiny screen are not helping. In fact, they’re making the situation worse.
Research conducted by the Global Financial Literacy Excellence Center at the George Washington School of Business found that young people who use mobile fintech (financial technology) apps tend to make worse financial decisions and have lower levels of financial literacy, despite having more assets, making more money, and higher levels of education than the general population.
These technologically advanced fintech users tend to overdraw their accounts, overspend, and make more expensive premature withdrawals from retirement accounts.
So while they may be on the cutting edge of technology, they lack the basic budgeting skills and financial discipline needed to keep them out of trouble where it really matters.
It could be that electronic payments “make spending too easy and budgeting more difficult” says Quartz, a news website focused on global economic change.
The Takeaway: “Technology isn’t a substitute for basic financial education,” says Quartz. Sometimes it’s better to put the phone down, and do things the old-fashioned way.
We’ve observed the same phenomenon when it comes to checking account balances frequently online. The more you look, the more it prompts you to take action when none is called for, and the worse your investment results.
So when it comes to managing your finances, the best approach – to paraphrase Elvis – is a lot more thought, a little less action. Make it a rule to stop checking balances, making purchases, or moving money on your phone, unless it’s an emergency. Think of it as much-needed impulse control. Financial technology makes paying for things on your phone “easy and mindless,” say GWU researchers. Young consumers need to learn how to resist the urge.