Understanding Why You Spend
March 31st, 2009 | by Administrator |One of the great and most productive challenges facing someone in debt is working out how they got into debt in the first place. For some this may be very easy while others will find it very difficult. Taking the time to understand why you spend money the way you do is a great process to gaining financial control of your life and taking the first steps to being free from debt and whilst on your way to freedom, managing the debt you have.
Aside from debt that is accrued as a result of the obvious catastrophic reasons such as the loss of employment or the break up of a relationship, in normal circumstances debt can be attributed to “emotional spending”. We all have different reasons why we spend money, aside from the necessities in life, that we all require, food, shelter, transport etc. Outside of the necessities we will spend our money emotionally on those things that we require to satisfy any one of a number of emotional reasons, desire, jealousy, feelings of inadequacy, keeping up with neighbours, and so on. This emotional spending can even occur with the necessities, examples can be the social stigma attached to shopping at certain supermarkets. We know that we can save money by shopping in discount shops for some of our necessities, but do we want to be seen there?
Just as some people will reward themselves or find comfort in their favourite activities or food there are many who will spend money to reward themselves in response to various emotions. Most of us have occasions in our lives when some special event has happened or we have achieved something against the odds and we immediately feel like we need to go and celebrate. We will either buy a gift to reward ourselves, or a loved one that has something to celebrate, or we will go out and indulge ourselves by eating a meal at our favourite restaurant and taking along our friends. Many people buy material things in an attempt to make them feel better about themselves, at times when they are down emotionally. Often a reward or a desired item can be a great lift, even if we only reward ourselves.
It is not unusual for people with some forms of, or varying degrees of low self-esteem to spend money on items that they think will impress others. Showing off their material worth creates a feeling of well-being and achievement to overcome their esteem issues. This allows them, if only fleetingly to feel good about themselves and feel a sense of worth. People will sometimes buy an expensive car or the latest, biggest television to boost their ego and give them a reason to show off to their friends. People don’t just buy when they are down though, some people buy when they are happy, as the feeling of gain helps to maintain their happiness.
Many people these days buy on credit, on impulse, with no thought of how they are going to afford their purchases and no regard for the future and the fact that they are going to have to someday pay off the debt. The debt they have just incurred today will probably be around for the next year or so, maybe even longer, whilst they slowly pay it off. Impulse buying can be particularly dangerous, it is generally for items that you don’t really need, that you got caught up in the moment with and the debt that comes with these types of purchases is something that you definitely don’t need. These debts you will possibly regret for a long time when faced with the prospect of paying them off for a long time.
If you can define precisely why you buy, and this just takes a little thought, this will take you a few steps to being in a lot more control over your financial future. Consider the last few items you bought using credit and why you did so. You will then begin to understand that the short term benefits that you gain from your spending sprees are certainly outweighed many times over by the stress and worry of the financial burden that they bring with them. Ultimately that feelgood credit purchase will have the reverse effect in the long term as it adds to an ever increasing mountain of debt. The classic vicious circle of debt causing misery, misery prompting the feelgood purchase, adding to debt causing misery. Breaking this cycle by understanding it, must be one of your objectives in your journey to debt freedom.
It might even be necessary to seek professional advice to help you change these bad habits, that are getting you into financial strife on a regular basis. Make sure you shop around for free advice there is plenty around.More often than not our bad spending habits are just like any other bad habits that we are unaware of most of the time. By recognising and understanding our behaviour we can break these bad habits and start to manage our debts by not increasing them, then taking action to eliminate them.
