Are you spend-crazy?
If you’re not sure, ask yourself the following “have you ever…” questions:
- upgraded your phone even though your previous one worked just fine
- traded in your car even though the other one was in good condition
- dumped perfectly good clothes off at a thrift store
- bought a bigger home than what you actually needed
I’m not here to judge: I’ve done all of those things myself.
All of this buying is in pursuit of a better life. We think if we have more things, we’ll suddenly feel fulfilled. But the more I thought about it, the more I realized this obsession to spend actually decreases our happiness in the long run.
The Stress Buying Causes Us
Overspending creates stress for many reasons: First, it decreases our overall net worth. For every dollar we spend on “stuff,” that’s a dollar we don’t have to invest and take advantage of compound interest. Compound interest is one of the greatest tools to use to greatly increase your net worth over time, as I explain in Compound Interest and Passive Income: A Simple Explanation That Will Transform Your Financial Future.
The second reason is that it creates clutter. All of that stuff has to be managed, organized (which means you need a bigger place) and protected (so then you spend more money on alarm systems, cameras, outdoor lighting, etc). You spend more time hunting for things, too—lost items that seem to “disappear” in your overly spacious home.
The final reason is that buying and buying affects your career situation. When you spend too much, you have to work more to pay for the stuff. In your quest to have more, you can spend longer hours at the office, away from your family and friends with little to no time for them or your hobbies.
It can also keep you trapped in a job you don’t want to be in because all those expenses mean you can’t afford to quit—which also means you may have to work longer when you’re older because you spent so much when you were younger.
The Reasons We Buy
In order to embrace frugality, we have to first realize the reasons why we like to shop. We buy some things out of necessity—like food and medical supplies—but a lot of it has to do with emotions. In our quest to feel both comfortable and “special.” we’ll buy much more than we actually need. In other words, it’s how the item makes us feel that compels us to pull out our wallets.
Companies know this and spend billions of dollars a year trying to get just the right emotional tug from potential customers like us. Then they try to come up with systems that make it easy for us to buy what they’re selling.
The reasons break down to something like this:
You Want to Feel Good
Whether it’s your desire to resolve a health issue or to look good when you go out in public, your ultimate goal is to feel better about yourself. Companies know we all have this desire and create products to cater to it.
This holds true for just about anything—from breakfast cereal to cars. For example, for the cereal, you might choose the high-fiber one because it’s healthy or the sugary one because it tastes good.
For a vehicle, you might buy the Subaru because it’s high safety rating, which decreases fears of being injured in a crash, or the red sports car because you want to show off to your friends. Either way, it’s about feeling good.
Getting More Is Easier
What if you had to make your own soap and shampoo, build your own house, sew your own clothes and grow your own crops? This is what people did generations ago. Because they had to work so hard to create just about every single item they owned, they were happy to have one small home, one bar of soap, and two outfits each.
These days, if we want an item, we can walk into a store or do a search online and the item is already there for us. We don’t actually manufacture the item ourselves so the only “work” involved to get the item is simply to select it and pay.
It Sure Looks Pretty
Marketers spend a lot of time choosing the packaging of their items. They know how they present their products can make or break your choice to buy what they’re offering or not. If they don’t appeal to your emotions, you’ll skip it.
Think about the items in grocery stores: Do they really need to box up the food and put pretty labels on everything? Not really. It would be cheaper to have everything in big bins where customers scooped what they needed into a brown paper bag.
But it looks prettier—thus appealing to our emotions more—when it’s packaged. The manufacturer gets to use fancy font and bright labels. And then you end up paying more for less food, all because it’s presented in a more compelling way.
Getting More Is Easier (Part Two)
Credit is another way businesses have made it easier for us to buy. They’ve created lending systems to make it easy on you to purchase beyond what you can afford in cash.
Think about what it’s like when you visit a car lot. The salesman will try to show you a shiny, new car outside of your budget and say, “This amazing car can be yours! All you have to do is sign on the dotted line for a loan at 8.8% APR…”
If there was no such thing as borrowing money, most Americans would live in a tiny home (at best) and drive an old beater because that’s all they could afford. What would happen if you couldn’t borrow any money to buy a car or home? What type of home would you live in and what kind of car would you drive? It’s a sobering thought.
Credit cards—even if you pay them off each month—are another type of lending. Study after study has shown that most consumers spend more when they use a credit card to pay for things rather than cash.
That’s because when you use a card, you’re not really paying for the item at that moment. You’ll be paying for it later, and maybe even just a portion of it if you don’t pay off your balance each month. This lessens our financial commitment to pay for the item in the moment, making it easier to overspend.
The Cure for “Spenditis”
Calculate the True Cost
Stores—and the internet—make it incredibly easy for us to have more things. Unfortunately, though, we can forget the hours we’ve had to put in at work just to earn the money to pay for it. We may not be sewing clothes or planting seeds but we did have to work to have the items around us.
The next time you want to buy something you know you don’t need, calculate how much time you had to spend at work to earn enough to pay for it. It can be scary to think that you might have to work a whole month to pay for that new furniture.
To Feel Good, Look Inside
Feeling good should come more from within us then from shopping. Some people buy just to get that temporary high of having something new. Others buy to get approval from others. If you are only looking at external cues to validate your self-worth, you’re bound to be disappointed.
What do you do each day to feel good from within? Whether it’s having some sort of spiritual practice such as prayer or meditation or listening to self-help videos on YouTube each morning, I think everyone needs something they can lean on each day to remind themselves that they have value. And it’s important to do this daily. Living in today’s world can be tough and it’s too easy to have a slip in the self-esteem department.
Having gratitude for what you already have helps, too. Gratitude makes you realize how lucky you already are and that you don’t need more stuff to live the good life (because you already are). Try to take a moment each day to remind yourself of the people and things you are thankful for. This can dull that never-ending desire to have more.
Have a Plan
Do you have a plan for what you really want out of life? If you don’t, you should. Planning helps cure “spenditis” because you have a goal in mind and that goal is going to be more important to you then more stuff.
To have a plan, you first have to figure out where it is you want to go. What do you really want to be doing for work? Where do you want to live? Who do you want to share your time with?
Once you have that figured out, you can write up a plan on how to get there. I call this the Lifestyle Plan, and I discuss this in further detail in my article Better Than a Budget: Why You Need a Lifestyle Plan.
Invest Like a Pro
If you invest your money, rather than carelessly spending it, you will find joy in watching it grow. Nothing is more satisfying than taking, say $500, investing it and turning it into $5,000. Watching your money grow exponentially can become far more addicting than any shopping spree because you’ll feel a sense of peace and financial security that you’ve never had before.
I always advocate investing in stable companies that pay a healthy dividend. Check out my article Why Everyone Should Own Dividend Stocks (A Simple Guide) to learn more about how to get started and as well as the names of the companies I personally invest in.
Buy Less, Get More
The next time you want to buy something you know you really don’t need, ask yourself if it’s worth it. Sure, I believe in living the good life. There’s nothing wrong with buying things and there should definitely be a limit to frugality. (I once read about a couple who washed and reused their paper towels. That’s ridiculous!)
I also believe in surrounding yourself with the type of things that make you feel good about yourself—a vehicle in good condition, clothes that flatter you and reflect your personal style, a comfortable and stylish place—but take a cue from the Europeans and go for a quality instead of quantity. (If you want to know more about how Europeans strike a balance between living well and living within their means, check out my article What Europeans Taught Me About Being Frugal.)
Also, try to keep the item for awhile before trading it in. The key is to find a balance between comfort and image and not buying just for the sake of it. If your current vehicle or phone is in good condition and works perfectly fine, why trade it in?
By spending less, you’ll actually end up with more—more money and more time. You won’t waste time shopping for things you don’t need, you won’t have to work as hard and your bank account will still grow.
But what you get is even greater than that: peace of mind from having financial stability and more time to spend with friends and family, as well as on your hobbies. The net result? Less stress and a more joyful and fulfilling life:)
Do you think you’ve had “spenditis”? If so, do you think this article will help you cure it? I would love to hear from you. Feel free to reach out to me at firstname.lastname@example.org to share your story. Au revoir, namaste and until next time…