Go for it! Rewarding yourself for a promotion, passing an exam or meeting a fitness goal is perfectly okay.
But to treat yourself to a shopping spree because you feel you “deserve it” is an act of self-sabotage, as it can rack up too much debt.
Put another way, why do you deserve astronomically high credit card bills that cause you stress and financial difficulties? Even worse, money is being stolen from your retirement savings.
The retirement accounts of millennials in particular are the lowest of any generation. No generation has been under more pressure to stop spending and start saving for retirement.
That “little” overspending problem may even be an addiction or an obsessive-compulsive disorder. Understanding why one is spending too much money is the first step to becoming a recovering shopaholic.
Why do people spend too much?
- Peer pressure: Millennials love to spend. Those who think the iPhone is a staple and life would be boring without a monthly Spotify subscription are probably spending too much money keeping up with the Joneses. The top millennial blogs are about, yes, spending!
Not many have a job that involves spending money on luxury items. Those who are not being paid to spend should consider putting some of that money away for retirement.
- Retail therapy: Those who engage in retail therapy, also known as comfort shopping, are trying to cheer themselves up.
They may treat themselves to new shoes or a new dress when something goes wrong in their life.
This type of pick-me-up can actually be healthy if they do not overspend and incur debt.
Those do get into debt must think about the silly rationale they are using. In exchange for a temporary boost, they are incurring six to 12 months more in credit card payments that will exert financial pressure.
The next time retail therapy seems like a good idea, go for it, buy that favourite pistachio ice cream or that great new iPad app. Self-therapy does not have to land you in financial straits.
You don’t “deserve” to do the following:
- Submit to impulse buys: Impulse buyers often incur the highest debt. Sound familiar? On a walk at lunchtime, a taupe Burberry raincoat with an elegant back pleat catches your eye. It’s on sale in a store window.
“What size do you need?” asks the shop assistant as the coat beckons. “That will be RM2,000, cash or credit” she says as you whip out your credit card.
So how do you break this habit of overspending? Start by taking an inventory of the home. List all the items that have never been used, used twice or three times and not used in a year.
Many eco-friendly women are using this popular rule of thumb: “Whatever clothing in my wardrobe I do not wear for more than a year, I will donate to charity. For every new item I buy, I need to remove (donate) one item.”
- Gamble for Gucci: To match the perfect dress for that important party, why not invest a couple of thousand in a pair of Gucci shoes?
Once the heart of the rich date is won, the shoes will have been a cheap investment. But if he remains indifferent, a couple thousand more has been added to the pile of debt.
Gucci bags have become one of the ultimate symbols of success in Asian society. But, like impulse buying, buying to increase status is a form of gambling.
Ultimately, it can lead to financial difficulties and emotional problems. Gambling can ruin families, jobs and lives, whether it takes place at a Gucci store or a blackjack table.
- Be seduced by advertising: Advertising is cleverly designed to manipulate people into buying what they do not need. It uses all of the psychological traps mentioned above.
Remember when the whole world lined up in front of toy stores to buy Cabbage Patch Dolls? Smart marketers convinced parents that their children had to have these cuddly dolls.
Why not cuddle more with family and friends? Will people one day look back and think how silly they were to line up for days for the newest iPad?
Human beings are often illogical creatures. They place a higher value on what they have today than what it will cost them in the future.
The enjoyment of having a Burberry coat, a Gucci bag or the newest iPad is more important than the pain it will cost when they have to pay for them in high monthly instalments over the next 12 months.
This article first appeared in The New Savvy
The New Savvy is Asia’s leading financial, investments and career platform for women. Our bold vision is to empower 100 million women to achieve financial happiness. We deliver high-quality content through conferences, e-learning platforms, personal finance apps and e-commerce stores.
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