Shopaholic!

Shopaholic!

I’ve been fascinated by “spending” recently for some odd reason.  I’ve seen its addictive qualities in many clients’ lives, friends’ lives, and sadly even my family’s finances as well.  It all seems to start the same, we buy a few items that seem harmless.  Next thing you know, you are getting successive credit card bills and thinking to yourself, “Boy this got out of hand quickly.” 

The natural first question at hand is why do we seem to spend more than we should?  I’ve done a lot of reading, analyzing, self-reflecting, and observing.  I’ll distill it down into three main categories below.  I’m curious which you most identify with.

Ignorance-

The first reason I find people spend uncontrollably is simply ignorance.  Now, I don’t necessarily mean these are ignorant people, but ignorance in general.  Perhaps, one spouse is simply unaware of the family finances.  They seem to think everything is fine financially and yet things are getting out of control.  It is easy to point fingers in this type of situation, but honestly, both spouses are culpable.

The Cure-

To me this is the easiest one to “cure” when it comes to overspending.  For starters, having an open dialogue on finances is critical in any relationship.  It is important to be on the same page and not afraid to discuss these things sensibly.  In other instances, you may need to bring in heavy artillery.  In this situation, I’d recommend consulting with your financial advisor.  We can help lay out the cause and effect of one’s spending in real terms.  A good financial planner should be able to not only lay out the immediate ramifications of out-of-control spending but also the long-term negative impact, such as working longer or not paying for kids’ college.

Addiction-

The second reason I see people spending out of control is simply addiction.  When we spend it can release endorphins and dopamine.  These are chemicals in our body that make us feel good.  If something makes us feel good, the natural reaction is to do more of it.  People that fall into this category usually start out spending on smaller items, then as life and finances dictate need bigger and bigger purchases to get that chemical reaction going.  Think of a drug user who builds up a tolerance and needs a bigger quantity each time to receive the same release.  No different when it comes to addictive spending, it can spiral quickly and leave a family in financial ruin.

The Cure-

Now there are many ways to attempt to thwart addictive spending.  One can seek help professionally or join a group much like AA.  You can simply go cold turkey, like those who give up smoking on the spot.  I’ve seen individuals journal or catalog their spending.  In some instances, simply keeping to a strict budget and adhering to that budget can be very useful.  I’m a big fan of flipping the addiction on its side and harnessing those addictive qualities for a positive result. 

For instance, instead of getting that dopamine hit by spending, try doing it for savings.  Think of savings or investing as “spending” in a way.  See how quickly you can build up that emergency savings, or kids 529 account, or perhaps that 401(k).  Can you get it over $10,000, $100,000, $1,000,000.  In all seriousness, I’ve seen a lot of people really obsessed with savings milestones, and that I would call a good addiction.

Void-

The final reason I have read or witnessed people spend is to fill a void in their lives.  Or similarly to distract them from other harsh real-world realities.  Some use spending to combat depression or loneliness.  Others use it as a way to cope with difficult emotions, feelings, or memories.  Spending is like any other vice that people turn to in difficult times to forget about life’s woes.  Some go to drugs, alcohol, gambling, and eating.  Others prefer retail therapy.

The Cure-

Now let me start off by saying I am addressing those who admittedly have a problem with spending.  If you spend to fill a void responsibly, I’m not so sure there is a major problem.  If you are constantly spending at the perils of your own health then there is certainly an issue worth addressing.  Thus, we need a cure. 

The cure can of course be professional help to help address these voids.  For others, that aren’t as serious it can be to fill this void with something constructive.  Some way for them to find a release and what they need, in a more positive way.  Perhaps volunteering or exercising more.  Maybe join an organization, group, or team that you are passionate about.  We all need distractions in life, and I’d encourage this group of individuals to do some real soul-searching as to what they are passionate about and spend that time and money that is being wasted shopping on healthier habits or activities.

Spending when done responsibly can certainly be an enjoyable thing.  If you start to find yourself on a slippery slope, I find it best to stop in your tracks and address the cause right then.  This way you can tackle the problem before it becomes a real issue.  Remember we are here to help any way we can.

As always stay wealthy, healthy, and happy.