Hey, Big Spender!

Do you know someone who likes to splash the cash? Maybe that someone is you. For lots of folks, recklessly overspending their (or someone else’s) money is a compulsion. Bad financial habits make it nigh impossible to differentiate between “needs” and “wants”. We look at five major reasons why spendthrifts cannot resist the urge to splurge... time and time again. Instant Gratification Big Spender goes into a store, sees something they like and thinks: “I need it NOW”. There’s almost a sense of accomplishment - get what you want now, think of how you will actually pay for it later.  It’s a case of “immediate rewards, delayed punishment”. Intangible “Assets” Big Spender flashes the plastic fantastic at the register because it doesn’t feel the same as handing over that real-life, hard-earned folding stuff. Studies have shown that people are less likely to buy — or at least less willing to spend as much — when paying with cash as opposed to credit cards. Keeping Up Appearances Big Spender constantly seeks the latest and greatest product or service on the market in an attempt to create an image of wealth and success, all in the name of trying to impress others: friends, family, neighbours, workmates... It’s what they call in the classics “keeping up with the Joneses”. Sense of Power Big Spender spending big actually makes them feel more powerful, it gives them a sense of self-worth. Whether handing over a wad of cash or pulling out the platinum AmEx, the simple act of spending a large amount of money makes them feel like they’re someone worth something. Low Self-Esteem Big Spender thinks buying shiny new things will generate positive feelings, like making them happier or cheering them up. Research shows that people with low self-esteem — or perhaps even depression — engage in impulse spending, buying things they don't need, to improve their mood. Perhaps it’s best to ponder rather than squander. So, if you want to spend time (but not money) finding out more about this topic, check out these interesting articles:  http://financialplan.about.com/cs/creditdebt/a/UrgeToSplurge.htm http://www.stretcher.com/stories/01/010917c.cfm http://money.msn.com/personal-finance/why-we-cant-just-save-more-and-spend-less

Posted 11 years ago 2 Minute(s) to read