By elmads

Humanity has been in this world for almost 200,000 thousand years. Our ways of living have evolved since then, but our basic survival needs have always been the same, which is the need for shelter, food and clothing. Today, it is through the trust of money, as medium of exchange that we achieve these basic human needs.

As time continues to move forward, humans keep on trying to further improve our state of living through technological innovations. This gave us the opportunity to make our lives easier, more accessible, faster than ever and also significantly increase our survivability.

With this came new trends, industries and sectors in the world that gave new cravings, wants and also needs for the people, which contributed to the exponential growth and expansion of the different economies in the world. This is the greatest abundancy of products and services that humanity has ever had. All of this resulted into the increase in productivity of every country due to factors like spending.

Spending money should not be seen as good or bad. Do you know why there are people who save and invest a lot of money? that’s because they plan to accumulate it based on their own personal priorities in their lives. These people save and invest their money which they will eventually spend at a later time, whether it’ll be for their own specific endeavours, goods and/or services in the future. Money is just a tool to attain what we really want and need in our lives, which are all predicated to our own psyche.

There is no good or bad spending, there is only repetitive spending habits that causes either current to future problems, or happiness. Spending is not the culprit for money mismanagement, it is the spending habits and patterns that people do, which are all connected to emotions, personality and life experiences. Here are the repetitive spending habits that can cause problems in our lives and the popular reasons that led to these habits.

Consistent Spending Habits that can Cause Problems

• Retail Therapy – Everyone experiences stress, either at work or at home, and each one of us have different coping mechanisms that we undertake in order to lessen the stress levels, including our sadness. One of the most popular coping strategies is retail therapy. One of the most popular coping strategies is retail therapy. In here, an individual excessively purchase products and services that they would not even need at all. This in turn helps decrease the sadness they feel and gives them a sense of happiness.

Retail therapy is indeed helpful to improve the mood of a person but only in a short-period of time, eventually the negative feelings will come back afterwards. This is because the goods and services purchased is not the main problem that caused the stress and unhappiness. Attacking and solving the root cause of the problem is always the best and the only solution, not the shopping spree.

• The Keeping up with the Joneses – This is a popular American idiom that pertains to people comparing themselves to their neighbours, and see success as the person with a lot of material and physical goods. This is pushing an individual’s standard of living into territories that far exceeds their financial capabilities, just to impress others or be in par with the elites of their community. In this current generation, It is called as “The Keeping up with the Kardashians”.

This really happens and is prevalent in different parts of the world. For instance, a neighbour might be compelled to purchase an even better car just because their neighbour bought a new and fancy one. The competitiveness of some people are just in a whole different level. The problem that mostly arises with this attitude is that most individuals go into debt just to have better material goods than others, which causes financial ruin if done consistently.

This happens because some people are too exposed to this kind of society, status games and its competitiveness. Although, this can significantly boost one’s confidence but only for a short period of time. Not all individuals can sustain such lifestyle most especially for those who spend more than what they can actually produce.

Another example, Michael is keeping up with Jackson’s spending habits worth £5,000 a month. Jackson has a salary of £10,000 monthly, whereas Michael keeps on spending £5,000 worth of money monthly but only has £3,000 salary per month, just to be in the same level with Jackson’s spending habits. Clearly, Michael will definitely go into bankruptcy anytime soon if he continues with this habit.

Somehow, insecurity and envy are in play with this level of spending.

• Excessive Bragging – As you have noticed, I wrote the word “excessive”, because bragging is not completely negative in nature because all of us brags, flex and floss at times. Yet, excessive bragging is what causes financial disasters by going into negative cashflow and debt just to show everyone that they are successful.

Bragging is also an ego boost method for some people. It gives a sense of fulfilment and enjoyment for these persons who receive the praises and adornment on what they have shown to their community either through social media posts or personally flaunting it to others. Just like what I said, this is not bad at all until it becomes unsustainable through purchasing excessive goods and going into debt just to floss it to others. It’s just literally what Dave Ramsey has said;

“Spending money you don’t have for the things you don’t need, to impress people you don’t like.”

-Dave Ramsey

Being accepted and be seen as a star can turn south pretty quickly, plus it can become poisonous when a person solely focus their energy and drive to achieve that level of fulfilment and enjoyment. At the end of the day, those feelings are only fleeting especially when the things that they brag cannot be continued anymore due to their poor financial decisions. Learning to love once self and giving importance to people who truly gives us the drive to become a better versions of ourselves will always be more than enough.

In Maslow’s hierarchy of needs, this problem could be attributed to Love and Belongingness, and Self-esteem. I’ve made a blog regarding this and its relation to money, titled “The Motivation of Life and Money Management”

• Rewarding yourself too much too often – This is a case to case basis, like if you’re a type of person who has a good income to fulfil your and your family’s basic needs. Some people unrestrictedly reward themselves to much, how much you say? as in 0.00 savings or worse, negative savings due to debt. I know a lot of employees like myself are drained and stressed about work. This is the reason rewarding ourselves is important, but doing this reward system without any money management habits will be just a never ending cycle of zero savings or negative net worth.

The cycle of; Working, Receiving Income, Spending it all at once religiously then repeat.

Stress is never good for our own health, that’s why it is crucial for us to find what makes us truly happy then we should focus our energy on it. Our personal true happiness are just a few things when we deeply think about it, whereas the other things that we think gives us joy are just what the society have imprinted in our minds what happiness should be.

Same as retail therapy, if something causes us unhappiness like for instance our work, then we must ask ourselves why.

• Once we found out our why, we must find the options that we could take in order to attack the root cause of our unhappiness and problems.

• Next is to take actions, and if it works then that’s absolutely great, if not, then we either accept the circumstances and continue to work, or find a better suitable job.

There are three ways that I could think of to get around from this: work hard and smart by expanding our sources of income, being efficient with our money by spending way less than what we make, or the best option is to do both.

Oh! and one more thing, the more things we want to purchase or achieve, the more we need to work harder and smarter, unfortunately.

Remember that we only have limited resources with unlimited wants and needs. Thinking for our own future selves’ well being is the same as making sure that our current well being is being looked after too. To be honest, it just suck to think about reality, but what can we do if we’re not born with a silver spoon in our mouth.

• The social status of the family we grew up with – The rich saves and invest their hard-earned money, while the poor spends their hard-earned money. Don’t get me wrong in this statement. I am not here to point out the social divides in our society, I am here to focus on the psychology behind the poor and the rich regarding handling their own money. I know that this is a sensitive subject for some but I want to give you, my readers a broader understanding behind their spending psychologies.

The Poor – There is a mentality of buying now within this kind of life, it is because poor families only have an ample amount of money to live by. It is living pay check to pay check in order to survive. Being born in this kind of life will certainly influence a child’s mentality, that whatever money the family has, should be spent immediately for basic necessities. Saving is mostly out of the equation, and what moulds here is the instant gratification.

Parents seldom are able to do the reward system as a method to encourage children to do things for their own children’s benefit, this is due to the lack of money. For example, parent’s will say that if their child will have good grades then they’ll buy their child a toy, unfortunately the toy is out of their scope because of financial constraints. This will result for some children to be discouraged and be disappointed. They’ll understand that promises will no be realized by their parents.

Nevertheless, a poor family’s mentality of being a good person and striving hard what makes all the monumental difference between still becoming poor and getting out of poverty.

The Rich – On the flip side, the rich families are the ones who have financial stability because of their stable jobs, professional growth, businesses, more opportunities and knowledge. Their children have an easier life and are able to be taught about delayed gratification, because money is not of a great issue with them. That is why wealth substantially multiplies with rich families with having the continuous mindset to use money as a tool for their own and family’s priorities, plus the ability to make their hard-earned money work for them.

NOTE: not all children who were born either rich or poor, have or will have the same path or problems, because the Poor definitely can become the Rich, while the Rich can certainly become the Poor. Everything will boil down to an individual’s mindset, patience, knowledge, skills and attitude. Our willingness to have the best life that we want and we could ever achieve, will dictate our own future reality.

Poverty pushes people to settle on short-term needs rather than thinking of the long-term rewards. This has been a problem since time immemorial that no one knows how to end. That is why spreading financial literacy is one of the best processes to undertake in order for the lower class to be able to have the knowledge and also skills to make their lives easier and get out from the cycle of hardships. Our lives are to precious and important to be lived within the cycle of pay check to pay check.

Review, Be aware and Attack the main Problem

There are things that cannot be controlled within ourselves, but being aware of it makes all the difference. Reviewing once self will always be helpful, we need to accept the weaknesses within us. This goes with spending as well,

• Self Awareness – If you are self aware that you have spending problems, congratulations that’s one of the most important steps. Self-Awareness, helps us understand what makes us, tick and what buttons make the person who we are and it is significant step forward into improving parts of our lives.

• Root Cause Analysis – Find the root cause of your dilemma, and understand how you could change the bad habits.

• Micro Habits – Start from the bottom, cut down your repetitive spending habits little by little in order for it to be sustainable. Having a good saving and investing habits is just like having a splurging spending habits, it is an arduous task to take the 1st step and be consistent with it. What you change is actually not the habit, but your lifestyle and the comfortability and mindset that is tied into that lifestyle. You will be pushing yourself to be uncomfortable for a couple of years, if not a decade which just makes it so hard for most people to undertake. For some, it is torture but for others it is liberating and fulfilling. So removing once habit needs to start from day one, then everyday with discipline, consistency and perseverance, until that negative habits will have been transformed into one of our best routines.

• Never lose sight and neve lose faith in your own financial goals.
• Seek guidance from families, friends, people who have experienced the same problems as you have, and/or professional assistance.

To sum it up

Spending habits are different to each one of us, some people will easy to judge that other people are spending too much, to less or none at all. The problem here is the judgement, when in fact the one that maybe has a repetitive spending habits that causes problems is ourselves. A person could spend a large sum of money but for them it is only a small portion of their salary or savings, whereas for us it is already more than our total salary and savings combined.

We should not focus on other people’s spending, what we should focus on is ourselves. Because when we compare ourselves to others, that’s when the real problems occur such as envy, insecurity, keeping up with the Joneses, and bragging. Henceforth, financial disaster not just to ourselves but also to our dependents.

“All improvement in your life begins with an improvement in your mental pictures.”

-Brian Tracy

Knowledge is my Sword and Patience is my Shield,

elmads

This blog is for informational purposes only and not a Financial Recommendation. Not all information will be accurate. Consult an independent financial professional before making any major financial decisions.