What Type of Spender Are You?
Overspending is a major issue for many Americans as poor financial habits or the lack of personal finances skills drive many into a toxic debt spiral. Consumers have become accustomed to a certain way of life, whether they can afford it or not. Learning to curb spending habits, whether they are emotional, impulsive or habitual requires a bit of discipline and financial awareness.
All the budgeting and personal finance planning means nothing if you can’t stick to them or are irregular with your discipline. One of the quickest ways to take control of your finances is to understand your financial habits and the type of spender you are.
If you are an emotional spender, effective personal finance tactics such as a budget or financial planning are of little use as they won’t deter you from purchasing items based on serious emotional states.
Essentially this type of spender does so because their emotions get the better of them, either from a place of happiness, boredom, fear, anger or other emotion. An emotional spender really has two options to try and control their spending.
They can either seek some professional help such as a therapist or counselor if the problem is serious enough, or try to tackle it on their own. If professional help is not needed, the emotional spender must do some serious self-reflection and create practical tactics to control the effects (spending) of their emotions.
If you are an impulse buyer, you may have a similar connection to spending as an emotional spender but not as serious as this is type of spending is more random and is not as deeply rooted as that of an emotional spender.
An impulse buy is something like seeing a sale for an item you like and purchasing it as you feel it’s a great deal, regardless if you need it or have the money. This is one of the biggest culprits of driving people into debt.
To combat this type of spending there are several strategies that can be used. One of the more popular tactics to eliminate this type of spending is to only carry the amount of money you need for the day and leave your credit/debit cards at home. This still gives you freedom to spend your money as needed, but limits your overspending.
Another type of spender that many people are guilty of being is that of the habitual spender. This is simply those that fall into a habit of spending unnecessary cash on everyday items, which over time kills their budgets. These habits usually build over time and become ingrained in our social patterns. Small things like purchasing a coffee everyday can morph into purchasing a double large espresso macchiato and that spending goes from $1.50 to $5.00 a day. This multiplied by the various habits of eating out; drinking at the neighborhood pub or getting the latest fashion look from your favorite brand every season can blow out your budget without you even realizing it.
These are the people who generally have great discipline when it comes to sticking to a plan. They are well aware of their budget and keep to it, staying organized and making adjustment to their finances as need be to balance out unexpected expenses.
It’s not to say that a controlled spender doesn’t have debt or financial problems, they are just more likely to be aware of issues before they become serious and have a plan on how to fix them.
Essentially controlled spenders are more aware of their finances and are generally on top of their cash flow.
What Type of Spender Are You
The best way to identify your spending habits if you don’t already know as many people fall into a little bit of all these, is to create and review a budget. If you have a bank account with a major bank or credit union you may already have an online spending history to draw from.
Reviewing the types of purchase you make throughout the week or month will quickly help you identify the different spending types you participate in.
Examples of feelings that may arise:
Emotional & Impulse feelings: Buyer’s remorse after purchase; have an abundance of items they don’t need/want; can’t believe they purchased certain items; feeling of wastage; feeling of disappointment.
Habitual feelings: Defensive as it’s a part of their day/life; can be in denial that it’s an issue; surprised by wastage; Try to justify
Controlled feelings: Surprised if there are any bad or excessive purchases
Once you identify the different types of unnecessary purchases in your daily/monthly budget, you can start to create a plan on how to slowly eliminate them or reduce them from your daily spending.
A big eye opener for anyone is to add up all the unnecessary expenditures for a month (this can be eye opening in itself) and then multiply it by 12. In some cases people will find that this figure will be in the thousands!