Big Spender

We all, including me, have spent money on something we don’t need just because. The stress of the global pandemic, the stay-at-home orders, and the inability to gather in groups or see friends has us all spending more than we probably should these days on things we likely don’t need. When I find myself wanting to purchase something that the rational part of my brain knows isn’t a true need, I always find it helpful to reflect on the why behind the want. That helps me to get rid of the false rationalization I’ve created that’s telling me I need to buy something unnecessary. Let’s talk about three of the big reasons we all overspend from time to time: 

1)    Boredom: This is a big one these days. When we’re bored, we scroll. When we scroll, ads appear for cool things that we may want, but don’t necessarily need. If you find yourself “adding to cart” a little too often just because you saw something fun while you were boredom scrolling, try requesting to hide the ad or finding another means of entertaining yourself that won’t involve advertisements. Color a picture, go for a walk, play with your kids or pets, or try cooking a new recipe.

2)    FOMO: Fear of missing out, formerly known as “keeping up with the Joneses”. How many times have you bought that one pair of shoes just because a celebrity told you via social media they were his or her favorite? Have you taken a trip you couldn’t afford so you wouldn’t be the only one of your friend group left out? Next time one of these FOMO situations pops up, I suggest you use it as an opportunity to review your budget and see how overspending may affect your long-term savings plan. Use an online savings calculator to figure out how much you could have in your retirement account if you had invested that money instead of spending it.

3)    Thrill Seeking: I really love a good deal. There’s nothing better than finding a store has marked down an item for clearance and getting it for 70%, 80%, or even 90% off the original price. However, if you’re not going to use the item or gift it to someone else who would love to have it, then it’s probably not worth whatever “deal” is being provided.  

Let me be clear, I’m not saying you shouldn’t ever spend money for fun. I’m just saying limit the fun spending to what you can afford (within your budget) so you can keep up with your savings activities for long-term goals. Essentially, be mindful of when and where you’re spending your fun money. If you find yourself impulse buying, slow it down, think about why you’re wanting to make the purchase, and decide whether or not it’s really worth it before you plunk down your hard-earned money.

- Margaret Gooley, CFP®, Worley Erhart-Graves Financial Advisors