It's tough to go anywhere these days without someone or something enticing you to part with your hard-earned cash. There seem to be more incentives to spend, than there are to put your money away in a savings account.
Look at all the commercials on TV that claim that their product is the one that can make you more beautiful, smart, rich, or funny. Consider newspaper ads and catalogs that have happy, smiling people and beautifully photographed products next to coupons promising huge discounts. A sale can even turn a trip to the grocery store for milk into a cart full of groceries.
The only way to avoid giving in to the urge to splurge is to be an intentional spender. Intentional spenders don't get suckered in by special promotions and clearance sales when they aren't planning to buy anything. They give a lot of thought to how they spend, where to spend, and how much to spend before leaving home.
Pavlov's Dogs and the American Shopper
In school, you may have learned about experiments run by Russian physiologist Ivan Pavlov, a Nobel Prize winner. Pavlov's research on conditioning found that dogs could be conditioned to salivate for food simply by ringing a bell, even when no food was present.
So what does this have to do with your spending habits?
Think about it. Do you get excited or even begin salivating at the thought of buying fast food, new electronics, new clothing, a pair of shoes, or other goodies when you see a commercial on TV? Do you get a rush when you pull into the parking lot of the local mall and see the sign for your favorite department store? If so, it's possible that you've been conditioned to feel the need to shop just by hearing or seeing a particular logo or word.
Understand Your Spending Triggers
Knowing your spending trigger is crucial to breaking the urge to spend. Some common spending triggers are loneliness, frustration, sadness, stress, and anger.
In some cases, people feel pressured to spend because everyone else around them is doing it. It's the keeping-up-with-the-Joneses mentality that's gotten so many Americans up to their ears in debt. Ask yourself why you feel it is important to have whatever your friends and neighbors have. Make a choice not to covet what other people have and make spending choices based upon your own personal needs.
Keep a spending journal for a few weeks to figure out when and why you tend to spend money. This doesn't have to be a complicated task. Just keep a small notebook with you and make a note of what you bought, why you bought it, how much your spent, and how you felt making the purchase. Be honest with yourself if you really want to get at the emotional and psychological roots of your spending issues.
Do You Hate the "B" Word?
I think most people dislike the thought of having to stick to a budget. But putting together a plan is crucial to managing your spending better. Figure out how much you must spend on necessities like food, shelter, utilities, and transportation to work. Then set up limits for discretionary spending on items like entertainment, dining out, or cable TV.
No matter how you break up the categories, the overall amount you spend each month should be less than what you earn. If you are spending more than your income, you may be on a dangerous path and have the potential to run into financial hardship.
Use your budget religiously and adjust the categories as needed. For example, when you pay off a credit card, re-allocate the amount of the monthly payment to another debt so that you can pay it off faster. This type of debt snowball can help you get credit cards and loans paid off faster. Make sure you actually write down the new amount in your budget.
Curbing the impulse to spend can be tough in a society where new strip malls, fast-food joints, and entertainment venues are opening up all over the place. Get tough with yourself and be accountable to a plan to stop overspending. Find an accountability partner who also wants to change their ways and work together to become more financially fit.