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This Is Why You Can’t Stop Overspending

Finance

You’re burning cash to fulfill an unconscious need. Here’s how to stop the problem at its source.

Understanding money is simple.

Even if you don’t know the more complex aspects of, say, index funds or ROIs, everyone generally knows what it means to be good with money. Spend less than you earn, save for the future, stay out of debt. Money principles are simple—it’s human psychology that’s complex.

In fact, when we talking about money management — like many things in life — we’re actually talking about our psychological relationship with money.

In a way nothing else does, money touches every level of our hierarchy of needs. Money is required to meet our basic needs (survival) but it’s also a signal of status (belonging) as well as essential to building the lives we want to live and becoming the people we want to be (actualization). Money principles are simple; it’s human psychology that’s complex. That’s why so much financial advice — similar to diet or relationship advice — doesn’t work. It’s correct in principle, but in practice it’s flawed. Most money advice is either not sustainable, or it addresses surface-level issues without addressing the underlying problems.

Fundamentally, our financial problems stem from unmet needs. In the case of compulsive overspending, the problem is almost never that a person lacks self-control. Rather, they usually have an unmet basic need — which they are subconsciously addressing through overspending.

People exhibit self-control when they want to. In fact, people generally do what they want, pretty much all the time. It’s a fundamental principle of human behavior: People are motivated by their own wants and needs. They may not say — or even know — what those are, but their actions reveal them regardless.

If you overspend on clothing, for example, you don’t actually believe you need 1,000 items in your closet. More likely, you’re uncomfortable with your body or status. You’re projecting that problem onto your clothes.

Clothing has helped you feel good about yourself in the past, which initiated a feedback loop. Now, you think you’re always one dress away from feeling at peace in your own skin.

If you’re overspending on restaurants, you’re not so lazy that you can’t be bothered to cook a single meal. Rather, you’re overspent and exhausted from doing things you don’t want to do. You need to give yourself a bump of energy in the form of a food high, one that will temporarily mask your lingering unhappiness. That’s what makes the rush of Seamless so compelling, as opposed to the few extra minutes it would take to prepare something fresh at home: The instantaneousness meets your immediate needs and gives you permission to ignore your long-term happiness.

When you’re living above your means, it’s not because you’re a fool who’s fallen victim to lifestyle inflation. It’s because you’re still under the impression that riches equal wealth. You believe success is not what’s in your bank account, but how much you can lease each month. This is particularly common in people who feel a deep and unmoving sense of failure, even if they’ve accomplished a lot by other means.

You may think I’m going to conclude by chastising you for buying a $5.00 latte. I’m actually here to say the opposite.

The path to true financial health is not to reduce your life to the bare minimum in order to save the absolute maximum. Instead, it’s to take an honest look at your needs and meet them with long-term solutions.

If your problem is low self-worth, invest strategically in things that will make you feel worthy. Maybe it’s a few amazing pieces of clothing that are tailored well and will last forever. Maybe it’s a few sessions of therapy. Maybe it’s professional photos you’ll rely on for years — and that will provide the confidence boost you seek.

If your problem is burnout, invest in rest and relaxation. Consider working a shift that will better suit your well-being. Instead of spending on things that numb you, consider taking mental health days, reducing your hours, or setting aside money for a personal trip that will invigorate you.

If your problem is low self-worth, it’s time to start investing in things that will make you feel worthy.

If your problem is lifestyle inflation, invest in what will make you feel genuinely successful. Maybe that’s a side gig producing and selling your art. Maybe that’s reflecting on what makes someone worthwhile and valuable to others, and how you can better embody that in your own life.

If you keep trying to fix a problem at the surface level, you’re only going to dig yourself deeper. The answer isn’t a stricter budget, it’s self-awareness. You must understand your needs to resolve what’s really going on inside yourself.

When you do this, your goals will begin to naturally align with your actions — and your purchases. It’s not about convincing yourself never to eat at a restaurant or buy new clothes. Rather, it’s about creating a budget that allows you to do what you desire in life—instead of letting yourself be controlled by uncomfortable impulses.

When something shifts within you, something shifts around you. Not the other way around.

 

This story originally published on Medium.com