By Shawndi Purselley, CFP®, CDFA®, Owner and Co-Founder, Wealth Advisor
While top-rated pop star Ariana Grande’s song “7 Rings” talks about complete self-indulgence, it’s not sound financial advice. The famous lines in her song such as “I see it, I like it, I want it, I got it” and “My receipts are looking like phone numbers” give consumers the notion that money and spending can solve all problems. And while psychologists agree that spending on consumer items can actually give someone a sort of natural high, there is a flip side to that feeling. Overspending or compulsive shopping disorder can stem from anxiety or depression surrounding money and can be a type of impulse control disorder. In the song Ariana Grande actually accepts the notion that retail therapy is her new addiction. She also brags about buying a house just for the closet.
I always suggest having a real conversation with yourself about how you feel about money, how you feel when you spend it, and how you feel when you save it. So why do so many American’s fall into the catastrophic mentality of “keeping up with the Jones’”? I must admit, I love new trends in fashion and home décor. I find it hard sometimes to take my own advice and work through the mental process of not overspending on unnecessary items. I remember about 20 years ago a Kirby vacuum cleaner salesman came to my door and convinced me I needed his vacuum. After purchasing it, I spent about 2 weeks feeling remorseful and upset with myself for spending money I didn’t really have on a vacuum cleaner I didn’t need at the time.
Marketing firms are brilliant. They spend billions of dollars every year convincing consumers to give in to their need for instant gratification. If you can’t afford an item, the firms convince you to just buy it on credit. Clearly the consumer spending industry is doing a good job reminding you that you need what they are selling. Consumer debt approached $14 trillion in the third quarter of 2018. It was the 17th consecutive quarter for an increase. The average individual credit card debt stands at $5,331 in 2019. Additionally, on a monthly basis, 55% of Americans don’t regularly pay their card off in full.
So, how does the regular American consumer stop listening to social media “influencers” that tell us that we MUST buy, use, decorate, and/or wear the product they are promoting? How do we “turn it off? “
Here are a few tips and ideas for hanging up your spendthrift ways:
- Understand what causes you to spend money. Is it mood, emotions, or triggering events?
- Track your monthly spending. Sometimes realizing just how much you are spending on consumer goods can be a rude awakening to where some of the problem may lie.
- Unsubscribe to retail emails and unlike that Facebook page. This can be a great way to reduce your exposure to that next year-end clearance sale or to decline the next new fabulous item you think you need. I know firsthand if I don’t know about a sale, I won’t spend money buying sale items.
- Unfollow known social media influencers which continually persuade you to purchase that item you simply can’t live without.
- Another great idea I read about is implementing a 10,15, or 30-day rule. It’s simple: if you see something you want simply force yourself to wait. If at the end of your 10,15 or 30 days you still want or need the item then maybe it’s a valid purchase (as long as it fits in your budgeting plans).
- Don’t give in to peer pressure, or your own personal pressure to fit in to the next great fad.
- Find a different hobby. For many Americans, a day at the mall or department store is considered a pastime these days. Take a walk, ride a bike, or spend quality time with family and friends.
As always, we are here for you to help you understand your spending triggers and to also help you develop a sound financial plan and budget to hopefully curb your desire to spend spontaneously or frivolously.
 According to the New York Federal Reserve
 According to Data from CreditDonkey.com