Yahoo Finance 3 ways to identify problematic spending, and what to do about it
Learning how to control your spending is important for financial confidence. The first step is to look at your emotional spending patterns.
I spent many years stuck in seemingly never-ending, self-sabotaging spending cycles, which saw my bank balance suffer. It made me question: Why am I behaving the way I am with my money? And how do I change the way I spend?
I define emotional spending as the process of spending money to either rid yourself of an emotion or feeling, or to acquire a new one. Sometimes it’s a hybrid of the two, but usually, there’s a primary motivator.
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For example, online shopping after a bad day at work. My primary motivator here is to rid myself of that icky feeling and get a nice juicy splash of dopamine to improve my mood. On the flip side, shopping for clothing that helps me feel better about my body image has a different primary motivator – acquiring a new feeling, usually confidence or worthiness.
But because money has such an emotional undercurrent, it can be hard to recognise when your emotionally charged spending is problematic, and when it’s just part of the way you spend.
Here are three ways to find out whether your spending is problematic, and how to regain control of your finances.
1. Look at the emotions at play
Sometimes it’s hard to know whether an emotional attachment to a spending decision is problematic or not.
After all, you want to feel something when you hand over your hard-earned cash.
A telltale sign is the emotions that are at play when you’re engaging with spending and consumption. If they’re truly positive emotions, you could be in the clear. But if they’re negative emotions, like low self-worth, shame, avoidance, anxiety or loneliness, you could be upholding cycles of disruptive financial behaviour.
Pay close attention to your emotions surrounding your spending decisions for clues to identify if it's problematic or not.
2. It’s not what you’re buying, it’s why you’re buying
Often people will ask me if their spending is problematic based on the things they’re buying – but this isn’t where you’ll find your answers. Two identical transactions can have two completely different backstories.
A great example is the age-old latte argument. The question of whether coffee spending is problematic is one of the most hotly debated topics in personal finance – but the answer doesn’t lie in the latte itself.
For some people, a latte is just a latte – and no, $5 a day won’t necessarily make you wealthy. But if that latte is a gateway to further emotional spending patterns, unwinding that habit could lead to drastic improvements in someone’s financial well-being.
In a similar vein, an online clothing order for one person could be completely innocent. It could be well-researched, aligned with their values and goals, and well within their budget. That same clothing order for someone else could be an act of self-sabotage that will add little value to their life – beyond the dopamine hit of the delivery notification, of course.
The bottom line is: it’s not the what, it’s the why.
3. Check your financial well-being
The third way to temperature-check your spending pattern is to look at your financial well-being.
Do you have a savings plan, or do you feel vulnerable at the first sign of adversity? Does your money last the week/month, or do you live paycheque to paycheque?
And, how do your finances feel?
Do you feel like you get value from your money, or do you feel like you have nothing to show for it? Does money make you feel empowered, or do you feel like you live and die by your bank balance?
By looking deeper into your finances, you can get a view of your financial health. And the better your financial health, the less likely it is that your spending patterns are causing deeper problems.
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