We all know how to spend money. In fact, it’s quite easy to do, and could be one of the things you do best! When we examine spending habits up close, however, we need to ask ourselves a few questions about how well those habits actually serve us.
It’s easy to spend money because everyone is trying to take it. We live in the world of intensely targeted, evolved marketing. Companies anticipate your every move and have something to sell you at every turn and at every hour of the day. We are constantly bombarded with the message to spend, and in order to not succumb to it, you have to be aware and vigilant.
The other component is that you get a hit of dopamine release whenever that register goes “cha-ching”, because spending is powerful and it taps into that part of your neural chemistry that activates the “feel good” feelings. This makes it even more important to be aware of these processes and bring consciousness to your spending.
One foolproof way to do that is to spend cash instead of using credit or digital currency. Experts say that it’s harder for you to part with your cash because it’s physical and not abstract. When spending with a credit card, the numbers on the register are removed from reality, and studies show you spend more this way. Conversely, cold, hard cash is real, and parting with it is more painful and therefore sparks more consciousness during transactions.
Another way to become conscious around spending is to create a budget. The concept of budgeting is simple: It’s assessing how much income you generate versus what you spend, and simply not spending more than you’re making. And ideally, if you’ve got extra left over, you’re saving it.
The truth is that you can’t actually save money unless you track how you’re spending it. Try making a list of all the things you spend money on in a week and assess whether those purchases are actually improving your life. Is that daily Starbucks habit really worth it? When you consider that a $5 coffee, five times a week adds up to $1300 annually, I’m sure you could think of hundreds of better ways that money could be spent.
In a country where 63% of us don’t have enough cash to cover a $500 emergency, it’s time to take an honest look at ways to turn off the firehose of spending. The system is set up for you to spend, and to feel like you will be one step closer to happiness once you get that next shiny item. But wouldn’t it feel equally as good and more fulfilling to know you have a nest egg saved away for those $500 emergencies, and you’re not a sad statistic and victim of savvy marketing with a bunch of useless crap you don’t need?
The choice is yours and it will probably involve some sacrifice. It’s not about how much you make, but how much you spend, and sacrificing instant gratification for your family’s better tomorrow. Is it worth it to you?
Resources:
Maggie McGrath, Forbes. 63% of Americans Don’t Have Enough Savings to Cover a $500 Emergency
Derek Thompson, The Atlantic. This is Your Brain on Credit Cards