I like using steps for anything I try to accomplish, especially in the realm of money stuff, because it prevents you from having an anxiety attack when you don’t accomplish everything all in one day. Like with learning any new skill, things need to be broken down into steps so that you’re doing one thing at a time. When I did my taxes for the first time, I didn’t set aside one day to do them. I set aside an entire month. Day one: uncrinkle my receipts. That was it. Success! If I had told myself I needed to sit down and do all my taxes and not get up until they were done, I would have panicked and found myself on the couch with a pint of Häagen-Dazs, taxes incomplete.
This is not going to happen to you on my watch. Baby steps, baby. And the first one, affectionately borrowed from our friends at other 12-step recovery programs is, all together now: ADMIT YOU HAVE A MONEY PROBLEM.
There, we’ve said it. You have a problem. I had a problem. We’ve all got problems and this is just one of them. Maybe it’s a HUGE problem for you right now, but it’s one that I can help you cross off your list. So one more time with feeling: ADMIT YOU HAVE A MONEY PROBLEM.
Okay, phew. Step 1: done and done! Now let’s move on.
Like any addiction expert will tell you, the first step to recovery is admitting that you have a problem. So, admit it: you’re an overspender! Now here’s how you can get it under control:
- You spend money when you’re emotional. This doesn’t just mean when you’re upset or angry (although who hasn’t engaged in a little retail therapy?) but also when you’re happy. No matter your mood, buying new things makes you feel better, and you can always find a way to justify your purchases. Much like people who eat to suppress or celebrate their feelings, those who spend when they’re emotional are at risk for larger issues. Small indulgences like your morning latte are one thing; stick to those harmless “pick-me-ups” so you don’t blow your money on something more expensive in the heat of the moment. Because guess what? It’s a vicious cycle: those same feelings that you might be trying to suppress by spending often lead to additional feelings of stress and anxiety. Chances are that when you go on a spending binge, the results are more costly than you expected—which will only lead to more anxiety. As you start to break the cycle, jot down a list of inexpensive indulgences included in your budget so even if you do slip off the wagon and spend when you’re emotional, it’s already accounted for.
- You don’t know when to stop. There’s a big difference between going to the store and buying one DVD and going to the store and buying ten. If you’re the kind of person who can’t walk down a “5-for-1” aisle without stocking up, this one’s for you. Compulsive spenders do not know how to set limits or differentiate between necessity and desire. These kinds of spenders buy on impulse instead of reason. Remember: if something is offered at a discount for buying in bulk, the price per item is usually the same. So you’re not actually getting more of a deal by purchasing five avocados when you only need one (and when they’re going to go bad before you eat them, anyway). Ask yourself if you really need that item, or if it’s just a want.
Pro tip: How can you tell if it’s a true impulse buy? Try walking away without buying it, and if in a week you still want it, then go back. I can guarantee that most of those “impulse” items will be forgotten before you even leave the store.
- You can’t live without plastic. The average credit card debt for an American household is more than $15,000. If that doesn’t tell you how prevalent overspending has become in our society then I don’t know what will. Ask yourself this serious question: do you think you could live one week paying for all your purchases with cash? If not, then you’re simply kicking that debt into the future—and digging yourself a bigger hole every single day. This is even more the case if you have tried and failed to limit your spending in the past. Again, it’s like dieting: you’re never going to be successful by “limiting” yourself without limit, and credit cards have no limit.
So try this. Take a little cash out at the beginning of each month. Yes, physical cash from the ATM, kick it old school. I recommend 5-10% of your monthly paycheck. This is your fun money. I’m not going to tell you how or where to spend it and I’m not going to judge you, but guess what: you get just this amount of cash, and when it runs out, show’s over until next month. It’s much harder to spend cash you don’t have than to keep swiping that credit card.
Most of us value honesty when it comes to character. When it comes to money, you have to be open and honest with yourself, too. It’s like cheating on a workout. You’re only cheating yourself, and you’ll never lose weight. A quick fix here and now will not solve the problem in the long run.
I’ve always said the best diet is the one where you only eat looking at yourself naked in a mirror. Will you eat the chocolate cake then? Same goes for money: look at the real version of yourself. Once you’ve looked into the financial mirror, would you rack up five grand in clothing debt? Didn’t think so.