The average American spends most of their money on housing, food, and transportation. Yet, consumer debt within the country is currently in the trillions. While some of that has to do with job loss, student loans, and medical expenses, unhealthy spending habits are also a factor.
Some people have a harder time saving money than others. In most cases, there isn’t necessarily anything wrong with that. After all, everyone enjoys buying something new or “treating” themselves to something they really want.
But, for others, unhealthy spending habits could be a sign of something more significant. Up to 6% of the population deals with a shopping addiction or compulsion. So, what does that actually mean? How can you address that something deeper might be affecting your spending habits, and what can you do to change them?
How Spending Money Impacts Your Mind
If you consider yourself to be a “shopaholic,” have you ever stopped to think about why? It could be due to the psychological effect that shopping has on the brain.
Think about it this way: when you’re anticipating buying something, your brain views it as getting some type of reward. This is especially true if it’s something you really want. It may not even be for yourself. Maybe you’re excited to buy something for someone you love. It’s the idea of making the purchase itself, rather than having the actual item that triggers this excitement in your brain.
Once you’ve made that purchase, the brain releases dopamine. It reacts similarly to things like alcohol, gambling, or other substances. Those can become addicting, and so can shopping. When your brain “lights up” and you feel happy, you want to do it again and again.
Unfortunately, it can quickly get out of control as you continue to look for and chase that rush of happiness. For some, that can lead to over-spending and potentially going into credit card debt.
Do you practice any of the following bad habits with your credit cards?
- You only pay the minimum amount each month.
- You often pay late.
- Your cards are carrying a balance
- You avoid reading your credit card statements
If that sounds like you, you’re likely avoiding a problem because you know you’re spending too much, but may not want to face that reality.
How to Address Unhealthy Spending Habits
It’s not always easy to admit you have unhealthy spending habits. But, coming to that realization is the first step in changing them. To do that, you have to force yourself to take a look at your habits. If you have a hard time thinking about anything regarding your finances, there’s a good chance there is a problem. Deep down, you might realize that you’re struggling with spending, but don’t want to admit it.
Some of the issues with credit cards stated above are often a sure sign that you need to address your spending. Another sign is not knowing how you spend your money. If you don’t pay attention to where your money is going each month, not only could you end up in debt quickly, but you’re likely trying to avoid the reality of the situation.
Facing your unhealthy spending habits may not be easy, at first. But, once you finally accept that you need to make changes, you can start to put them into place quickly and realize how easy it can be to make better choices with your money.
What Changes Can/Should You Make?
Once you’ve recognized that you have some unhealthy spending habits and they’re impacting your life, it’s time to make some changes. Easier said than done, but it’s not impossible.
Getting your spending habits under control doesn’t mean you need to give up everything. Instead, it’s about making small, manageable changes that won’t feel so extreme and can help you to start saving money by living below your means.
Some of the best tips to control your spending habits include:
- Asking yourself why you need to buy a specific item before you make the purchase. Even taking a step back to consider whether or not you need something can give you enough time to realize it may not be worth it. For example, if your default when something breaks or isn’t working right is to buy a new one, consider fixing it yourself. You might even surprise yourself with things like DIY car repairs and home maintenance. There are so many things you can take care of yourself for a fraction of the cost, so you can use that money elsewhere.
- Create a budget so you can see where your money is going each month, and where you can cut back.
- Don’t spend money you don’t have by overcharging on credit cards.
The most important thing you can do is to have a willingness to change. That might mean sacrificing a few things that are “money traps,” like going out to eat or using multiple subscription services. By changing your mindset about money and spending, you can actually start saving and get ahead. You’re not alone if you struggle with unhealthy spending habits, but, a few small adjustments can make a big difference in your financial health.
Dan Matthews is a freelance writer with a penchant for financial wisdom and solid research. You can find him on Twitter @danielmatthews0 and LinkedIn.
Josh founded Money Buffalo in 2015 to help people get out of debt and make smart financial decisions. He is currently a full-time personal finance writer with work featured in Forbes Advisor, Fox Business, and Credible.