A nice thing about human nature is that most people are innately positive. It’s known as the optimism bias: Most of us assume that the worst is behind us and good things lie ahead. This tendency, unfortunately, also gets people into trouble; as The Wall Street Journal notes, it’s one reason why people accidentally overspend.
For instance, when thinking about their financial futures, people tend to focus mostly on income, giving less thought to expenses, according to some recent research from the University of Colorado, Boulder. “This is how people end up buying a house or a car that they ultimately can’t afford,” said John Lynch, one of the authors of that study. “They estimate how much their incomes will rise and they know theoretically that they will have more expenses, things like insurance, the mortgage payments, gas, the repair costs. But they still ignore those costs when making the decision.”
Lynch, unfortunately, does not offer much advice beyond “I don’t know, be better at budgeting.” But he does sugggest that making very explicit budgets is better than making more general ones. It’s worth a try, anyway, for the sake of Future You.