The Psychology of Over-spending 🧠

It’s hard to understand how you could’ve run up that high of a bill. It probably didn’t feel like you were overspending at the time, it is almost like something was influencing your behavior…

What psychological trigger is influencing yours 🤔 Keep reading to find out!

Cash vs. Credit Card 💳

A study on the science behind credit card behavior by Dr. Utpal Dholakia suggests that consumers feel much less pain paying with a credit card rather than cash, contributing to overspending.

The lower pain is attributed to (1) the time difference between making the purchase and having to pay the bill (2) mixing many purchases together so the consumer doesn’t look at their credit card bill as one specific purchase.

These two reasons attribute overspending, but there’s many more reasons why overspending is a common issue.

Overspending 💸

Although a lot of debt is driven by low income and high costs of living, the larger portion of our debt is driven by a culture that often promotes bad spending decisions. With all of the credit products on the market, it can be way too easy to overspend. From payday loans, endless credit card offers, buy now pay later products, and the option to get a loan for just about anything- overspending is at your fingertips.

The most common psychological causes of overspending are:

1. Emotional Spending 🛍️:  If you’re in a bad mood or had a stressful day at work, you might think that retail therapy will cheer you up. Most of the time, that rush of satisfaction you get from buying something will soon wear off and just leave you feeling worse.
2. FOMO 😰:  Peer pressure can be hard to ignore, and when all of your friends are going to that concert or expensive dinner that you definitely can’t afford it’s hard to miss out. It’s natural to want to be a part of that, but compromising your financial security is a valid excuse to miss out.
3. Good Looks 💁‍♀️: You might have that expensive hair dresser or want to buy a nice suit to flaunt your “status”, even though you really can’t afford it. Those looks are not worth the negative impact on your finances, or the debt you’ll be paying off.
4. Scarcity 🙀:  That product that caught your eye in the store is 10% off, what if it sells out? Chances are, you can find the product somewhere else at just the same cost. Most of the time, sales are a marketing tactic…

Habit Building 😄

While psychology reveals why we feel the way we do about money, psychology can also help you build better habits for good 💪

Many times when we want to change our lifestyle, we go big or go home! We commit to going to the gym 5 times a week, going on a crazy restrictive diet, or only going shopping once every 3 months. This can be overwhelming and make us feel like we cannot successfully stick to that habit, causing us to quit.

We should start by building micro-habits: small, everyday habits that add up to a big change. It’s important to pick one small habit to do at a time. Eventually it will feel like second nature 🙌

By targeting the root cause of why your money habits might not be good in the first place, it’s much easier to build stronger and long lasting habits.

And that’s what the Debbie curriculum does 💚