The Underlying Emotions of Overspending
Identifying the emotional states that cause us to spend beyond our means
We've all done it - spent more than we should have on an item we probably didn't really need. Poor purchasing decisions are made by even the savviest of shoppers, especially during the holidays. But when these decisions become the norm, rather than the exception, it may be helpful to examine some of the underlying emotional states that often drive people toward this financially hazardous habit in order to break it.
Like all behaviors, spending habits reflect background, experiences and psychological makeup. "Children as adults will mimic their parents, even if they have modeled something counter-productive," says James Dion, an industrial psychologist and president/founder of retail consultancy Dionco, in an interview with DailyFinance.com. Below are some of the more common emotional states that drive people to make poor purchasing decisions and to overspend, and some advice on how to keep those emotions from sending you to the poorhouse.
Avoidance, which is not wanting to confront or deal with something found to be confusing or upsetting, allows one to be vague about when bills are due, for example, or how much discretionary spending money is available. Often referred to as "sticking your head in the sand", it protects from facing the harsh realities. "People prone to avoidance behaviors must first confront their total financial picture, from expenses to checking account balances," Dion says. One way to do this is to write down every purchase so that there is a concrete reminder of money spent. Dion goes on to state that being accountable for your spending -- to a support group, a friend or a spouse -- can be vital to keeping your financial house in order.
Depression can also trigger overspending by "scratching that depressive itch" to feel good, even if only for a minute, Dion says. It helps to be mindful that overspending has a lot of the same triggers as overeating, says financial adviser Leslie Greenman. "Don't get in the habit of looking for an emotional up from buying something new," she says. Finding healthy substitutes for the over shopping impulse, such as a regimen of physical activity, is also key, Dion says. "The endorphins [from physical activity] are good for your mind and body."
Low self-esteem can propel some people to overspend in order to boost their feelings of self worth. These over-shoppers tend to boast about their purchase, "feel the need to share it with their friends, tweet about it," Dion said. "It's a kind of showing off." Unfortunately that inflated feeling is short-lived. One way to boost self-esteem without the price tag is to take on pursuits that fill that void, such as volunteering or pursuing an interest or passion, experts say. Volunteering, for example, helps us to look beyond ourselves, our needs, offers Greenman. "It gives your life a bigger perspective", she says.
A need for instant gratification is perhaps the most pervasive of these emotional states. With non-stop messages in the media saying "you can - and should- have it now, coupled with the technology that makes it easier than ever to indulge those consumptive instincts, "there is more and more of a tendency in our society toward not denying gratification -- of getting things as quickly as we can," Dion says. "Americans have been turning more into short-term hedonists." To avoid impulsive spending, set up barriers to make it less convenient to shop from a computer, smartphone or tablet. "Don't make it easier to buy." Avoid setting up your accounts for one-click buying, which allows you to make a purchase with a single click by storing your credit card information on retail sites, he says.
And, whether shopping in a store or online, it's always wise to apply the 10-minute rule, says savings expert Andrea Woroch. Delay your purchases. "Follow the 10 minute rule," she says. "Usually the urge to buy something unnecessary will likely pass after 10 minutes."
About First Community Bank and Trust
First Community Bank and Trust is a privately owned bank. Established in 1916 First Community Bank and Trust has been serving Beecher, IL, Peotone, IL and the surrounding communities for over 95 years. Our commitment to providing the best banking products and services is matched only by our outstanding customer service. We offer traditional community banking services, including mortgage, consumer, and commercial lending, as well as state of the art electronic banking services.
# # #
Steven D. Koehn, VP
First Community Bank and Trust