by Phil Bradford
Is it our psychology that controls spending and saving?
The pattern of money handling behavior is different in people. Some people are savers and some are compulsive shopaholic. People have a different mindset when it comes to dealing with their own money. People who don’t spend much and often save money feels satisfaction every time they look at their growing account balances. But, they feel uncomfortable when they have to buy something.
On the other hand, people who are shopaholic feels that life is something to enjoy. They think, why save money? They don’t serious about their financial future or retirement savings.
What influences our money habits?
Our money dealing habits are controlled by many things. What are they? Sometimes, our psychology controls our spending habits. Or, our family background also generates spending values in us. Isn’t it interesting? Here you go:
- Money spending habits are planned in our brain
According to some studies, our brains control our money spending habits. Our brain decides when to spend or save. There is an area in our brain which is called “Insula” that controls such activity. Insula stimulation increases when you experience something bad.
So, some people who have more insula activity in brains are savers. Because, when it comes to money dealing, the insula stops them from spending much. People with less insula stimulation are spender or shopaholic.
- Money spending habits can be strongly influenced by our psychology
Another thing that controls our spending is our psychology or mindset as I have discussed in the introduction.
Savers feel pleasure when they loot at their total savings. They constantly want to feel financially secure. They even feel good when they get some items or services at a bargain price. These types of people feel the food is tastier when it comes at a low cost.
On the other hand, shopaholic persons want to enjoy their life by fulfilling their materialistic desires. They don’t want to deprive themselves. They take life quite easily and enjoy at their best. They don’t count the price tag as a barrier. They love to enjoy life to the fullest.
According to some researchers, money spending psychology develops from our childhood.
It generates from parents or from the persons who nurture a child. A child learns money habits from his/her childhood environment. But, some research contradicts this fact. They said money dealing habits are not based on conditioning. A child who brought up in a poor family can be a shopaholic mentality person. Or a child who grew up in a great wealthy family can be a saver. They also said a poor family child can develop great wealth in the future. Whereas a rich family child can blow the whole family fortune in the future.
Money psychology vs financial literacy
According to some financial experts, education can’t change people’s financial behavior wholly. Money behavior controlled by people’s natural biases and beliefs. It takes a lot of mental energy to go against money psychology. Sometimes going against money psychology creates significant stress in people. Financial literacy doesn’t work many times when the person has a certain strong opinion on his/her money behavior.
But that doesn’t mean financial education is not required. Financial literacy is very significant because people can’t get better with their finances if they don’t understand the mechanics behind how money works.
People can change their money psychology only when they get motivated by some kind of emotional consequences or emotional triggers.
Why does it important to balance spending and saving?
People who can’t balance saving and spending fail to manage finances.
For example, people who are extreme spenders fail to save money for their financial future. They often end up in financial trouble. They fail to live a financially peaceful life when they retire or age.
On the other hand, who are extreme savers often end up with regrets. They always restrain themselves from their comfort and feel sad when they realize they didn’t enjoy their lives only save money.
Thus, you have to balance when it comes to spend or save your hard-earned money.
How can you do this?
How to balance saving and spending money habit
People who have a compulsive shopping problem have to try to calm their impulsive shopping tendencies. Also, People who are extreme spendthrift need to balance their life. They should stop depriving themselves.
What should you do to control excessive spending mentality?
Are you extreme spenders? Try these tricks:
- Try to keep fewer credit cards.
- Keep a certain amount of money when you are going shopping
- Buy things with a credit card that you can afford in cash only
- Keep your eyes on your savings goals
- Avoid credit card debt
- Keep your financial goals visual
- Automate your savings
- If you can’t stop your shopping desires, then consult with a psychologist
- Reward yourself
What should you do to control excessive saving mentality?
Are you extreme savers? Try these tricks:
- Calculate how much money you need to secure your financial future
- Keep some enjoyment goals
- Plan small vacations
- Treat your purchases as trophies
- Be surrounded by fun-loving people
- If spending even a penning saddens you, then talk to a psychologist
- Keep a savings account dedicated for enjoyment and entertainment purposes
Lastly, you are the one who can take charge of your own hard-earned money. You have to balance your psychology towards money.
If you realize you can’t balance it, you don’t have control over planning destructive financial activities, compulsive shopping, and gambling, then seek professional counseling before making it worse.
If you think that you are unable to plan your money goals, then you can consider hiring a financial planner to get comprehensive guidance. A financial planner can help you to plan your short-term or long-term financial goals like tax planning, retirement savings, estate planning, investing, etc.
It is also the fact that people who are extreme savers or spenders often live a lonely and bad life. So, when you are earning your money by doing hard work, then you deserve some savings and some enjoyment in life.
See also a list of frugal living tips to help you save money instinctively.