Overspending? Psychological advice to break the cycle

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Compulsive shopping and overspending can harm financial well-being, but it doesn’t have to be crippling. Nor should it be a source of shame. Addressing the main reasons for your overspending and learning basic money management skills can help you get your financial well-being back on track.

Why people spend too much

Impulse buying can be enjoyable — for a while. Over time, your brain learns to expect that shopping will lead to that short-term pleasure. So just thinking on shopping tricks it into releasing dopamine, a neurotransmitter that signals reward and motivates you to buy again.

According to financial therapist Carrie Rattle, today’s society makes the temptation to overspend even harder to avoid. A major factor is effective advertising, which constantly alerts you to potential purchases and encourages you to think that buying something will do you good. Credit cards and online shopping make spending even easier and more ubiquitous.

“There’s a perfect storm,” Rattle says. “Social media, the separation of cash, and retailers mastering the psychology of marketing are all increasing overbuying.”

Shopping can also be a coping mechanism, allowing one to quickly turn away from difficulties such as anxiety, depression and personal uncertainty. For some, overspending becomes buying-purchasing disorder, or compulsive buying disorder (CSD), which is characterized by repetitive and uncontrollable spending that leads to serious difficulties in life. A 2015 meta-analysis suggests that around 5% of people – or around 18 million Americans – suffer from CSD, and that number could increase as online shopping becomes more prevalent.

Scientific evidence on CSD is still nascent. But psychiatrist Dr. Donald Black, associate chief of staff for mental health at the Iowa City Veterans Administration Hospital, says compulsive shopping likely results from imbalances in brain circuitry involved in impulse control and self-regulation.

“Parts of the brain like the nucleus accumbens that tell a person to slow down and consider the cost don’t activate normally,” Black says of people with CSD. “They lack sufficient control over these pleasurable impulses. It’s like a drug addiction.

How to spot overspending

To spot problem behaviors, think about when, why, and how much you overspend. Typical impulse buying or overspending involves buying items that you don’t need, haven’t planned to buy, or that don’t fit your budget. This overshoot is influenced by external stimuli such as sales or advertising. It can cause stress and budget constraints, but not serious life problems.

CDD, on the other hand, is more strongly influenced by internal impulses stimulated by negative life events or distressing emotions. Like problem gambling and addiction, short-term pleasure or relief leads to serious long-term damage to mental and financial well-being.

“Almost everyone sometimes overspends – say during the holidays, after receiving an inheritance, or at other times when they get excited.” Black notes. “But with compulsive shopping disorder, the problem is recurring and causes major stress in life.”

Recovery from CSD may require individualized counseling from a qualified psychologist or psychiatrist.

These questions can help you assess your relationship with spending:

  • What environments, products, or feelings tend to cause impulse purchases or overspending?
  • How did you feel before, during and after?
  • Does impulse buying or overspending cause financial stress or problems in other areas of your life? How serious are these problems?

Journaling or recording your daily expenses can help you see trends over time. Asking your partner or a trusted friend can also give you some insight.

And most importantly, don’t judge yourself. Many smart, successful people struggle with overspending. Dr. Johanna Peetz, professor of psychology at Carleton University, recommends practicing self-compassion.

“Be nice to yourself,” Peetz says. “Past decisions don’t define you, and overreacting isn’t helpful.”

Your goal is simply to better understand when and why you’re overspending, so you can take steps to improve your future behavior.

How to stop overspending

So you are buying or spending too much. Now what? Research shows that some popular strategies, including those often recommended by the media, are not efficient – including tracking sales and clipping coupons. But the burgeoning field of financial psychology provides evidence-backed advice on how to curb overspending and get yourself back on track to mental and financial well-being.

First, identify your important values ​​and goals. Ask yourself Why it is important to stop overspending. Consider the big picture. What long-term reward will come from controlling your spending (eg, freeing yourself from debt, saving for a down payment, feeling pride or control)? As much as possible, separate money and material objects from your personal identity, as a materialistic mindset tends to decrease well-being and increase wasteful spending behavior. Instead, consider what’s important to you that isn’t consumer-related, such as honesty, humor, family, or hard work.

Next, create a plan. Clear plans reduce stress and greatly increase the chances of achieving your goals. Specifically, identify the steps you will take to avoid or address the root causes of overspending. For example, you might avoid shopping when your willpower is exhausted or engage in other pleasurable activities like exercising or meeting friends if you begin to feel anxious or depressed. Indeed, part of your plan could include improving your life outside of shopping, suggests Black.

If you’re having trouble creating a plan, Peetz recommends incorporating all the good decisions you’ve made before. “Reflect on what has worked for you in the past and plan more,” she suggests. This can include anything from blocking certain websites, to paying cash only, to freezing your credit cards in ice.

Finally, consider enlisting support from friends or loved ones. Some people are ashamed to share their spending habits with others. But partners can help you be accountable and make good decisions. Additionally, research reveals that couples working together on shared finances can improve relationship satisfaction.

If you’re a compulsive shopper or an overspender, you’re not alone. The good news is that a little thought and planning can dramatically improve your financial behaviors.

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“Rich or poor, people from all walks of life overspend and feel shame,” Rattle says. “What’s important is identifying why you’re overspending and starting the road to improvement.”

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