It’s embarrassing, isn’t it?
When you look at your bank account and wonder “Where did my money go?”
Earning more doesn’t always help. For some of us, it seems no matter how much we earn it all vanishes before the end of the month.
Whether you think you’re addicted to shopping, lending money to friends, eating out all the time or just ignoring responsibilities and impulsively spending, it’s time to face the facts.
You might have a spending problem.
And however this problem shows up in your life, it will continue to ruin your financial life until you change your behavior. And you have to start at the source.
I want you to realize two things as we get started.
So, if you want to stop spending money foolishly, and you’re willing to take responsibility, then read this guide in it’s entirety.
It might just be the moment your relationship with money transforms. Forever.
Before we get into the good stuff, it’s important for you to recognize the source of your emotional spending.
Here’s how it works for most people.
At some point in the past, you felt unpleasant emotions.
You spent money on something, whether it’s clothes, food, shoes or booze and you felt better.
So, you learned that you can get rid of unpleasant emotions by spending money.
You’re not a stupid person, you’re not “low on self control” or weak, you’re not “really bad with money” … you just learned a way to avoid emotions you didn’t like.
Isn’t that a refreshing way of looking at your situation?
It’s easy to get carried away beating yourself up mentally, and getting frustrated because you recognize the same pattern popping up over and over again. But it doesn’t really get you anywhere.
Now, you’re probably wondering how you can escape this cycle.
The first step is to realize you have a powerful rationalization engine inside your head.
This rationalization engine can crank out a reason you did absolutely anything.
Spending $200 on new shoes instead of rent? “Of course, they were on sale, and I can always return them later.”
Lending $650 to your brother to help him pay for rent? “Of course! He’s family!”
Going out to eat 6 days a week? “Work is just so stressful, I don’t have time to cook at home.”
Do NOT trust these rationalizations! They are stories you tell yourself.
In 99.9% of cases they are NOT true and the reason you spent money was emotional rather than rational.
So the solution is to simply learn how to manage your emotions better. Learn how to face your fears, accept your situation and love yourself back to a financially healthy spot.
The solution is to simply learn how to manage your emotions better. Learn how to face your fears, accept your situation and love yourself back to a financially healthy spot.
The biggest battle you will face is the one between your ears. Not with what you think, but what you believe about yourself.
And, let me tell you… it’s not just you…
Like a virus that crept into our global consciousness, studies have found that our spending is out of control.
Check out this shocking statistic to see how insane our national shopping habits have become:
Since World War II, Americans have been engaged in a spending binge unprecedented in history. We now spend nearly two-thirds of our $11 trillion economy on consumer goods. For example, we spend more on shoes, jewelry, and watches ($100 billion) than on higher education ($99 billion). - (From Affluenza)
How do we manage to spend so much on luxury goods?
With the average household carrying $15,000 in credit card debt, it’s shocking that we continue to spend so much on luxury consumer goods.
We’ll get to the reasons why this happens in a minute, but for now let’s see if you spend your money foolishly.
Debt is easy to get and hard to escape. If you consistently carry a balance on your credit card, and buy new things when you know you can’t afford them, then you might have a serious problem to face.
Debt is like a drug, you can get addicted to the feeling of power and importance you get from buying things. And if you don’t have to work to get it? Even better! Until one day you’re in debt up to your eyeballs and seriously considering bankruptcy.
Your shopping habits can clearly indicate if your spending habits need a check-up. If you regularly browse Amazon at 2AM buying random things because you’re bored… then you may be addicted to shopping.
Please note, this is a symptom of a problem… not a problem in itself.
Yes. Eating too much can be a symptom of the same root problem as overspending.
Spending money on food, or eating out can waste a ton of money. Not to mention that spending money on fast food is one of the unhealthiest decisions you can make.
According to a study from bankrate.com many Americans live in a precarious financial situation. Regardless of how much money you earn, your savings demonstrate the reality of your money mindset.
This study from Bankrate showed that 76% of Americans have less than 6 months worth of savings, and 27% have no savings at all.
If you don’t have ANY emergency savings, then you need to seriously examine your priorities. No matter how much income your household brings in, there is always some disposable income.
If you don’t save any of that disposable income for an emergency, then you are setting yourself up for a potential disaster if an emergency were to strike. Think about it, is that new pair of shoes really worth putting your family’s safety and security at risk?
This is a sneaky way to waste money. Here’s how it goes, your sister comes to you and asks if she can borrow some money. She swears she will pay it back. You know she hasn't paid you back the last 7 times she asked to borrow money, but… she’s your sister! You can’t just say no to her! So you lend her the money and it vanishes into the black hole of lent money.
Look, you have to be on guard against yourself. Remember the biggest battle is the one between your ears.
You have a powerful rationalization tool inside your head, which seeks to make you feel good. And it can convince you that lending money to friends and family is a good idea because “they need the money more than you do.” Even if they do, you can’t take care of someone else until you take care of your own needs first.
So before you give to charity, or lend money to those in need, consider whether you are taking care of yourself and your family.
If you feel strong negative emotions, like anxiety, worry and frustration when you think about how much money you have in the bank, that’s a clear sign you don’t have a healthy relationship with money.
This means no matter how much money you earn, you will have difficulty keeping it.
As you’ll realize reading through this article, every aspect of your financial life comes down to your relationship with money. How you think and feel about it.
If you don’t change your emotional relationship with money, you will NEVER achieve the level of financial success you desire. Period.
The only way to accurately assess whether you spend money stupidly, or smartly, is to check in with yourself.
Do you feel good about your financial situation?
Are your assets growing and debts shrinking?
Do you know how much you spend on a monthly basis?
Be HONEST with yourself. You will never get anywhere by pretending your financial life is all hunky dory when it’s really a disaster.
And once you’re honest with yourself that you have a bad money program in your brain, you need to realize what it will cost you in joy and happiness for the rest of your life, until you deal with it.
Overspending costs you a lot more than dollars.
Yes, if you don’t invest money you will miss out on the miracle of compound interest and experiencing true wealth…
Yes, if you stay in debt you will have interest compounding against you… and dig yourself into a deeper and deeper hole…
But, it’s so much more than that…
Because when you stay in a cycle of “not enough” you will ALWAYS have to work hard, and you will NEVER get ahead.
Because you’ll have to put off retirement indefinitely…
Because you will never experience the choice freedom, and the lifestyle you desire…
Because you will constantly experience strong feelings of stress and anxiety…
Until you confront your overspending, and your relationship with money at the source.
Here’s what this sounds like “I deserve this because…”
No matter what comes next, that is the rationalization engine at work.
This is just a fancy way of saying “spending future money now”
Whether it’s a commission, raise, bonus or a new salary you’ll definitely get the money, right?
The problem is, if something goes wrong, and you receive less money than expected in the future you have already spent the money!
This is how debt happens.
Have you ever bought something just because it was on sale?
With our saving obsessed society it’s easy to use a sale as an excuse.
Jim Bunch, one of our resident experts, coined the term “Spaving” to describe this sneaky excuse.
You can learn more about Spaving and how to combat it in our free financial repair and recovery course.
Spaving: Spending money because something is on sale and you can “save so much off the normal price”
Yes, you should “be prepared” but you have to be very wary of any purchases you make “just in case”...
Because most of the time it’s just an excuse you use to rationalize emotional spending.
Social pressure is a dangerous drug. If your coworkers, or friends are all shopping, traveling or having certain experiences, you might be tempted to join them so you don’t feel left out.
But when you do this you’re only setting yourself up to continue spending, not because it’s the wise thing to do, but because of what everyone else is doing.
You can replace “birthday” with any other special occasion… wedding, bar mitzvah etc.
Yes, special occasions are fun. But what’s more important, a day of fun? Or a lifetime of financial security?
Have you ever wondered why stores allow you to return items even months after you bought it?
They know a certain percentage of shoppers will purchase items and plan to return them.
They also know the majority of these purchasers will change their mind and get attached to the item. (Or just forget to return it)
Think about the last thing you bought and used this excuse to rationalize… did you ever end up returning it?
Oh this is such a sneaky one. Somehow our brains actually manage to convince us “I’ve been using my money wisely recently, so I should reward myself by stopping to do that.”
Think for a second about how ridiculous that sounds when you see it written down.
This can easily le
Now we’re getting to the root of all emotional spending. Feelings.
Congratulations if you find yourself using this excuse often, it shows you are remarkably self-aware.
Now, all you need to do is generate positive feelings in other ways, so you no longer feel the need to spend money to feel good.
Scientists used to believe your personality was static. They believed throughout childhood you would form beliefs, habits and patterns which would then cement into your permanent personality.
We now know this is not true.
So, it is not “just who you are” … it’s “just what you learned to do”...
Which means you can easily learn to do something differently.
So… what do I do?
The first step to confronting your emotional spending habit is to acknowledge the root.
If you spend for emotional reasons, or struggle with compulsive spending, you need to re-train your brain to feel differently about money so you automatically and naturally treat it differently.
Keeping a budget won’t work.
Setting up automatic investments won’t work.
Earning more money won’t work.
The fact is, you will always struggle with money, until you change your fundamental relationship with money. No matter how much you earn, or what money management technique you try.
The good news is, training your brain to feel differently about money is easier than ever.
To discover just how easy it can be, we invite you to register for our upcoming event, The Brain-A-Thon.
You will discover how to identify the mental or emotional “blocks” which hold you back from having a healthy relationship with money.
You willl hear news from neuroscientists who will share new breakthroughs to allow you to release these blocks faster than ever before.
Click here to register now. >>
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NeuroGym Team: NeuroGym’s Team of experts consists of neuroscientists, researchers, and staff who are enthusiasts in their fields. The team is committed to making a difference in the lives of others by sharing the latest scientific findings to help you change your life by understanding and using the mindset, skill set and action set to change your brain.