Late last year, Forbes spelled out their 2017 tips for financial planning. The usual advice was included: maximize savings, revisit your investments, beef up your capital, etc. These tidbits are all rooted in longstanding principles of fiscal responsibility—primarily a financial perspective that stretches into decades instead of days. As Warren Buffett often counsels investors, “Think long-term.”
But while financiers are always ready to analyze how and where we spend our money to increase net worth, they seldom dive into WHY we spend our money.
They should. Knowing why we spend actually tells us a lot about our habits—both good and bad. It reveals our coping mechanisms and distractions. It also highlights gateways to addiction. When we identify these pitfalls from objective spending analysis, we can take further steps to address unhealthy behavior—while also improving our financial situation.
Spending as self-medication
The psychology of self-medication has been studied for centuries, though has become a more keen focus of health practitioners in recent decades. Often, however, studies of self-medication revolve around drug-related addictions or consumption. In many severe cases, medical intervention is necessary.
For most of us, however, self-medication is not as extreme. We treat our depression with an extra glass of wine. We avoid frustrating work obligations with more television. We ease the stress of familial strife with a shopping trip.
In almost all of these cases, we’re investing money in a distraction or temporary mood-booster. And because our spending is not noticeably irresponsible, no one calls it out—and we continue treating our frustrations, anger, sadness, pain, and loneliness with whatever money can buy.
These habits aren’t new, of course. There are countless cases of individuals coping with life’s downs by buying something. For some—like the boyfriend of this online blogger—a shopping spree distracts from pain following the death of a family member. Others regularly engage in unhealthy spending habits to curb feelings of self-doubt or low self-worth. Still others feed their obsessions by buying more stuff while letting responsibilities slide—like this video game addict.
It doesn’t help, of course, that advertising regularly equates spending with happiness.
In a perfectly supportive society, of course, we would either be self-aware enough to recognize and tackle our bad spending habits—and, in turn, face our problems head-on—or we would be open to others gently pointing out our unhealthy habits.
We’re not. We’re far more concerned with appearing to be weak or deficient, so we’re unlikely to listen when someone tells us to deal with our emotional upheaval.
The question is: How do we get around this and begin to heal?
Healing by the numbers
Emotion is nuanced and complex. And because of that complexity, we can weasel out of many explanations for our unhealthy emotional behavior by offering equally nuanced (if unfounded) justifications.
Contrarily, analyzing our dollars and cents is a concrete way to reveal how our emotions feed our habits. By knowing the activities associated with our spending, we can illuminate bad habits, coping mechanisms, addictions, and unhealthy behaviors.
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Here’s how to start analyzing your own spending (and learning where you need to heal):
Spend 30 minutes this weekend recording your non-critical spending from the past week in a spreadsheet.
Leave out the obvious expenditures like rent, utilities, food, loan or credit card payments, and other essentials.
Review this guide for an average budget.
Does your non-critical spending seem completely off? Make a note of where it seems to be inflated or imbalanced.
Next to each expenditure, make a note about what activity you were engaged in when you made the purchase(s).
Were you shopping for clothes with friends? Were you drinking at a bar by yourself? Were you sharing coffee with other professionals at a networking event? Do you even remember? Be specific.
Next, ask yourself this question: Which of these activities can you honestly say was personally or professionally fulfilling?
Contrarily, which activities served as distractions from a difficult life event or circumstance? Were any of them out of character or unusual for you? Highlight these.
Lastly, think about each activity that you highlighted and the purchase(s) that went with it.
This requires you to be completely honest about your emotional state and your potential weaknesses. But it’s critical to healing, so don’t back down.
What were you doing before and after each of these activities? Do you remember how you were feeling before and after—stressed, upset, calm, happy, anxious, excited? Make a note of these emotions. You can even use emojis to make the differences more apparent.
Read over your notes and begin considering your spending impulses and motivations. After reviewing your notes, put the spreadsheet away. (Dwelling doesn’t help either.)
Every morning of the following week, open your spreadsheet and review your notes for 10-15 minutes. At the end of the day, record your new daily expenditures.
Be mindful of your spending habits in the past, and how you choose to spend in the current week. As you record your new purchases, be sure to note associated activities, emotions, and budgetary anomalies.
The following weekend, review your two-week journal.
Are your habits the same week to week? Do you have a better sense of what pushes you to spend? Have you been able to pinpoint your emotions during each spending activity? Is your out-of-budget spending consistent and easy to recognize?
Share your findings with someone who knows you—and your habits—well.
Tell them the patterns you see and ask if they see the same ones. Do they recognize a connection between your recent behavior and the way you spend your money? Ask them to be specific—pointing to activities and purchases on your journal that align with your behavior.
Start drawing conclusions and take action.
At this point, you’ll know enough about what’s prompting your unhealthy spending to draw a few conclusions. Here are a few steps to get you there:
First: Where is it obvious that your spending is too high? What is it about the activity or item associated with that spending that’s so compelling? Is an addictive substance like alcohol, or is it simply a euphoric distraction from a bigger problem? Can you pinpoint that problem by reviewing recent events in your life?
Second: What activities are clearly non-fulfilling distractions—the kinds of things your closest friends would say don’t really interest you? What emotions or circumstances are you avoiding by temporarily engaging in these activities?
Third: Write down your thoughts, conclusions, and questions. Do you trust a family member or friend enough to share your findings with them? If not, do some research and find a mental health professional who can help you in the areas you’ve highlighted.
Spending money as self-medication is not new, and it’s not limited to a profession or demographic. It touches everyone. But knowing that you engage in this kind of distraction is a helpful starting point for getting to the root of emotional stress.
There’s no shame in seeking help, and there’s every advantage to getting your financial life back on track.