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We humans are an emotional bunch.
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We’re bombarded on all sides by the temptation to spend money on things we don’t need. Whether it’s buying another pair of tennis shoes or a tube of mascara, if we don’t need it, we’re needlessly draining our bank accounts.
However, labeling a habit as “bad” only serves to make us feel guilty and does nothing to address the real issue. Sometimes, it helps to figure out why we do certain things. Once we understand the genesis of our behavior, we can come up with constructive ways to take control.
Rather than dive right into tips, it may help to get a better sense of why we blow money at all. Here are five potential reasons.
1. Insecurity
Have you ever been invited to a special event but felt nervous about going? You look through your closet, and despite having racks of clothing you once liked enough to buy, you’re convinced that you have nothing to wear. If you buy a new outfit, you’re pretty sure you’ll feel more confident.
2. Sadness
There’s a temporary high that comes on the heels of making a purchase. Whether we bought a new car or a houseplant, spending money temporarily lifts our spirits. The problem is that research shows that we each have a “happiness set point.” Once the temporary high wears off, we go right back to how we felt before we pulled out our debit cards.
While later research on the subject found there are steps we can take to increase our happiness set point, needlessly spending money is not one of them.
3. Jealousy
We all wanted to fit in back in high school, and there was always that small group of people who seemed to have it all. At the time, it’s possible that we purchased a particular pair of shoes or brand of jeans because we wanted to be more like them.
Later, watching a close friend enjoy a new car or hearing a relative brag about their new dream house was enough to get our wheels turning.
When we’re envious of what others have and believe that jealousy will disappear when we own the same thing, we’re walking straight into a debt trap.
4. Stress
Stress is uncomfortable, and robs us of peace. It is during heightened periods of stress that we’re most likely to look for an escape hatch. Sometimes, spending money is a way to distract ourselves from the discomfort we’re experiencing.
5. The Diderot Effect
There’s an interesting theory of over-consumption based on the 18th-century French philosopher Denis Diderot. The Diderot Effect posits that buying new possessions often creates a spiral of consumption. The more we buy, the more we feel as though we need to buy. As a result, we end up buying things we never used to need to feel happy.
While there are many other potential causes for overspending, identifying our triggers helps us recognize why we’re so compelled to spend. And it may be that we each have several triggers.
Escaping the hamster wheel
We’re each capable of taking control of spending, but it will likely occur in increments and with practice. A 2021 peer-reviewed research article, published by the Public Library of Science (PLOS), offers these tips for taking control:
Don’t leave home without a shopping list. And then, stick to the list, no matter what catches your eye.Set a budget for each shopping trip. Once that money is gone, it’s time to go home. Pay with cash instead of cards. If pulling out a credit card is not an option, it’s easy to stick with your budget. Paying with cash also involves pre-planning because you’ll need to go by a bank or ATM to get the money. Keep cash in large denominations. It hurts a little more to break a $100 bill than a $5 bill. Set up specific savings goals. It’s easier to keep cash in your pocket when you remember you’re saving for a special weekend get-away or new sofa. Use savings accounts that make early withdrawals expensive. For example, you may put the funds you’re saving for short-term goals in a certificate of deposit (CD), and money you’re saving for retirement in an individual retirement account (IRA). Track weekly saving deposits. There’s nothing quite like watching your nest egg grow to encourage you to stay on track. Don’t fall for financing options. If you wait until you have cash to buy something, it gives you more time to consider whether you really need it. Consider why you’re tempted to make the purchase. Is it to make yourself feel better about something? Spending feels much less necessary once you identify your motivation. Anticipate regret over purchases. Imagine how you’re going to feel a few days after buying that thing you thought you needed. Will you find that it ultimately did not bring you joy? Will you regret not putting your money to better use?
Interesting side note: Researchers found that the only self-control strategy that resulted in an increase in spending was using coupons. It’s possible that it led to people buying things they could live without simply because they were getting them at a discount.
Overspending is not a moral failure, but it can be habitual. Once you’ve discovered the satisfaction of making your money work for you, you may wonder why you were ever tempted to buy anything you didn’t need.
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