I noticed I have 6 Types of spending habits and here’s a breakdown of how I spent my money before I come to realize the power of habits.
Type 1 Promotions and Sales (the Value Queen)
Tell me there is a SALE, and I will jump at it. Who can resist a SALE? 40% off?
I am someone who finds a promotion like Amazon Prime Day hard to let go. I buy something just because it is on promotion. Sometimes it is a really good choice, but often I find myself spending more than I should on something.
Have you ever bought something when you realized you already have a similar item at home?
When there is a special, or value deals, I can’t seem to resist when perhaps I don’t really need to spend that money. An extra microphone, a notebook, a bag that will match my new outfit, the list goes on.
Because something is on SALE, it does not mean I need it.
Remember to tell myself this – even if something is on sale, it doesn’t mean I need to spend money on it. Every dollar spent is an opportunity cost, perhaps money I could have saved to invest.
TYPE 2 – Covid Pandemic type of Revenge Spend
Have you thought to yourself that working from home, not having that restaurant dinner or activity made you extra bored and want to just go online and do “window” shopping to kill your boredom?
Being Bored is no good to good financial health. This is made worse when Amazon and so many other apps try to suggest to us items to buy.
Try to fill your time with meaningful dopamine generating activity than to shop online when you are bored.
Stop your brain from being rewarded by spending money.
TYPE 3 EMOTIONAL SHOPPING – “Addicted to Retail”
I get this, because I was once addicted to retail. I live in a city filled with malls, retailing all kinds of fun gadgets. Buying something makes me feel good, it is soothing, like an achievement. Emotions override logic in our brain and if we let our emotions dictates how we eat, how we spend our money, time, sometimes it just goes overboard.
How did I discover my emotional spending habits? I noticed whenever I was down, I would go for a little shopping, just buying anything and I immediately feel better. That soon became a loop. So next time if you notice you feel down, think of what you can do to overcome that feeling, process it instead of suppressing it with retail therapy?
TYPE 4 “I work hard, I deserve to be nice to myself” type of spending
I admit, I am a workaholic. When I work, it is intense and I go above and beyond. That was before “quiet quitting” became a trend.
So what happens after work? It is soulless, empty and I suddenly felt I lost a sense of identity. This happens when I attached so much of my identity to the company I worked for. The company and my career literally defined every bit of me. I spend hours in office. I pride myself as X employee. Seriously, what was I thinking?
If you fall into this trap, you will often find yourself, like me previously, lost after work. Overworked, and purposeless, I would spend money on myself because “I worked hard, and I deserved it”
Nothing wrong with rewarding yourself, but often this can run overboard so easily. Before you know it, credit card bills creep up and you are piled up with bills you can’t afford to pay. Today this is made worse with the AFTER PAY type of retail, that encourages buy now and pay later behavior.
Remember if you are buying something now, you should only buy with money now.
And yes, you deserve it, but it is a trap. You spend more, you work more to keep up with the new car, new bags and credit card bills and as you work more, you need to spend more to get any kind of “relief” or “destress”. Don’t fall into this trap!
TYPE 5 Fear of Missing Out (FOMO)
The fear of missing out has been around since the dawn of time. Ever since our ancestors were cave men and women, as human beings, we have always like to compare what others have or have not. Our fear of missing out, stems from our need to blend in, to fit in and be part of a tribe. This need however can be insatiable and hurt our financial goals. Instead of having enough to buy a new upgraded laptop for work, we spend it on restaurants or a new bag.
Just because your friend bought a new bag or shoes, does not mean you have to immediately run out to buy a new pair of shoes to match up.
I remembered how my friends used to laugh at me for wanting to have coffee in cheap non-air conditioned local coffee places instead of starbucks. At that point, I was still doing my startup. I moved back to my parent’s place and was saving every penny I could to plough it back to my business. I couldn’t really afford or want to spend $6 on a cup of coffee when I could have just snag one for a $1. However, my friends, quite a few wouldn’t go have coffee with me, because $1 coffee was just not nice. I admit, it didn’t taste as nice, it didn’t feel great but I valued the company of my friends, and just wanted a cheap get together. So did I choose my friends over a $6? Make a guess?
Change your friends, change your life. You can’t have your friends and your money all at once. Sometimes, you have to keep your priorities, draw boundaries and let everyone know you are saving money. A few of us find this socially embarrassing. So be it. Better be socially embarrassing than to be broke and pretending to be okay.
The last type of spending habit I noticed I have exhibited from time to time is
TYPE 6 “I am Santa Claus, people pleasing” type of spending
This kind of spending stems from possibly a low self esteem, or a deep seeded need to want to be wanted.
Buying your mother something you cannot afford, gifting your sister a nice dinner when you are already on your last dollars. Or buying something for your child, because you want to be a “good mother”.
Remember you cannot be a good mother to your child, if you do not discuss your financial reality with your child and just pretend everything is okay. That kind of pretending will lead to your child having bad financial habits as well. Discuss reality of finances with your child. Love is not about buying things or having experiences you cannot afford. Try to incorporate a healthy discussion that life is not always about keeping up with your peers, early in their lives. Trust me, it will save them a lot of trouble and do them a lot of good. The earlier we understand we do not have to fit in and spend money we don’t have to impress people who don’t care about us, the better.
Talk about spending money on family? I am guilty. I used to spend money I don’t have just because it is someone’s birthday and the only way I show “love” is an expensive gift or dinner.
Have you tried writing a letter with just pen and paper to someone you love, instead of spending money?
How about this as an exercise? Showing how much you love someone but Not spending money?
Walk in the park together? A chat together?
Playing board games? Sending an email?
Drawing a funny picture?
Remember if you start showing your kids, that showing love and care is all about buying something, that’s a really bad start to financial health.
Unfortunately today’s capitalist society, we have so much advertisements going at us, that tells us – “Spend money on this to show how much you care?”
Valentine Day, Father’s day, Mother’s day, Christmas, everything is designed to hurt your financial health if you are not careful with what you can or cannot afford.
Do not equate love and care with spending money. DO something today that excites you and show how much you care by not spending money.
Call someone you love today, have a chat instead. It takes more emotional work to do a call, than simply click and send a gift. But it is worth it.
Lastly, reaffirm yourself with these questions:
What are your financial priorities?
Are you saving so you can go on a holiday with your mother or a college fund? Every dollar you spend on something other thing is a dollar forgo on your priority.
Do you want to be at peace with yourself, knowing your credit card bills are really essentials, and not over spents?
Financial tightening, and money talk is not easy. You may find yourself in embarrassing situations when you have to stand up and say
“Sorry, I cannot join you for after drinks” or
“I am sorry, I am taking the bus home, I am not taking an uber” or
“I am sorry, I can only meet you for dinner if it is at my place and I cook”
Learn to say no to friends who are spending more than you can afford to have. It’s hard but it is liberating.
They will be your friends again when you have money again, just not the right time now.
Find out what are your needs, versus your wants.
Don’t spend just because it is a SALE, it does not mean you need to part with your money.