2 things millennials tend to spend way too much money on, according to financial planners

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• Financial planners say millennials have a few not-so-great spending habits.
• Spending on convenience and big-ticket items is OK, but not if they don't fit your budget.
• Setting financial goals and automating your bills before spending on wants can help.

We're all guilty of making the "wrong" spending choices from time to time, and millennials are no exception.

According to financial planners, there are two things millennials overspend on way too often. Below, they share the top ways they've had to help their younger clients curb their spending.

1. Spending on convenience

Financial planner Clari Nolet, of Team Hewins , says millennials have gotten used to the culture of instant gratification. The result is a tendency to spend on services that make things quick and easy, like food delivery apps that bring your meal right to your door, and fast. These services can be much more costly than cooking at home or even picking up the food yourself. And, they can add up quickly over the span of a month.

Financial planners say it's OK to spend your money on these things, but it becomes a problem when it doesn't fit into your budget or you're not meeting your financial goals. Having an emergency fund in place or contributing to your 401(k) should be prioritized before considering how much you can or should be spending on these extra services.

"I think most people, not just millennials, don't really have a budget and don't know how much they spend. They have an estimate in their mind. And if you ask somebody what [they] spend, they can give you an answer, but if you really dig into the details, you find that they're fooling themselves. The amount that they're spending is typically a lot more than they think," says Nolet.

She recommends having financial goals in place so you know what you're saving toward. This will help you figure out your discretionary spending budget once you've covered your priorities.

One of the first things to consider saving toward is an emergency fundthat can cover your expenses in the event of a job loss or emergency. Because of the job losses witnessed after the COVID-19 pandemic, Nolet says you should now aim to save anywhere between six and 12 months of expenses. The next thing to do is contribute to a 401(k) up to or above the employer's match to take advantage of that free money.

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2. Spending on big-ticket items

Financial planner Asad Gourani of AG Wealth Management is less concerned about millennials' day-to-day expenses. He's more focused on bills that are recurring and aren't flexible, such as a mortgage payment or a lease for a new car. These kinds of expenses are more difficult to cut out once you've made the purchase.

"After years of working almost exclusively with millennials, we noticed that the big theme is that millennials tend to spend a lot more on experiences rather [than] material items compared to prior generations, which is a very positive thing as long as it falls within their means," Gourani tells Insider. "Where the problem generally lies is with un-calculated spending habits and lack of planning especially around bigger-ticket items. Trust me, skipping on avocado toast and lattes won't make much of a difference on your finances."

Gourani's approach is to work with clients to help shift their mindset so that they don't feel like they're being restricted by a budget. This means developing a conscious spending plan that they are comfortable with — and is within their means — and then automating payments, such as housing, utilities, student loans, and retirement plan contributions. Then, whatever is left can be spent "guilt-free."

Certain payments, such as retirement contributions or savings, can be done directly through your employer. For mortgage, credit card, and loan repayments, those can typically be set up through your bank.

"The analogy we like to give is that budgets are like going on a diet, looks like [a] good solution but impossible to stick to for a long period of time. Instead, shift your mindset to a more sustainable, healthy lifestyle," Gourani says.

This article was originally published in April 2021.