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Strategies to Help People with Compulsive Spending


Strategies to Help People with Compulsive Spending. Money Mindfulness: Balancing Your Budget with Emotional Intelligence

At Untangle Money, we help you understand what you can afford without judging you for what you choose to spend your money on. We call this type of money 'Flex Money' because you can spend it Flexibly. Flexibly means whatever you want without judgment.


For some people, knowing this limit and different ways to decide what’s right for them is enough to help them stem their spending habits and focus on the purchases that bring them the most joy. For others, the spending is rooted in deeper issues. If you feel this describes you. We have highlighted some things you can try below.


Compulsive spending or 'shopping addiction' isn't confined to just one demographic or region; it's a global issue. According to the World Bank, consumer debt has been on the rise in numerous countries over the past decade. While not all of this is due to compulsive spending, a significant portion can be attributed to individuals living beyond their means.


Sisterly Advice: at Untangle, we find that a lot of people have inadvertently set themselves up for failure because they haven't given enough room to their Flex Money needs. As humans, we need to protect roughly 18-22% of our money to spend on food, clothes, gifts and the things that come up. Research shows that if we don't have this space in our spending plan then we, as humans, will reach for debt.

Moreover, the World Health Organization acknowledges that compulsive behaviours, including shopping, can be indicative of deeper underlying mental health issues. We live in a globalized world where social media makes it easy to sneak into the lives of others and bring out urges to do the trending, even when it’s beyond our means sometimes.


Sisterly advice: we are only taking a superficial look at overspending. Money trauma is real and can be rooted in many issues. Out of senses, spending can also stem from factors which are not in your hands. If you need deeper help, you can find financial and mental health professionals who can work with you here:


Understanding Compulsive Spending and Mental Health

Compulsive spending can often be a way for individuals to cope with stress, anxiety, or depression. It offers a temporary high, a distraction from underlying pain or discomfort. As with any addiction, the relief is fleeting, often leading to increased feelings of guilt, shame, and anxiety, creating a vicious cycle. People with ADHD may also use spending to find dopamine. But similarly to addictive spending, the dopamine impact is temporary, and what remains is spending that isn't aligned with your long-term goals.


Here are some effective strategies to incorporate if you’re someone struggling with striking a balance between your spending urges:

1. Recognize the Problem

Awareness is the foundation of change. In a survey by the Global Economic Forum, it was highlighted that young adults (aged 18-29) are particularly susceptible to compulsive buying, given the pressures of social media and the age of consumerism. Recognizing and accepting the problem is the first step toward making a change. Are you buying things out of necessity or just to get a temporary high? Acknowledging that you have a compulsive spending habit is the first step towards recovery.


Sisterly Advice: We can't change what we don’t know. Get curious about yourself. Are your spending habits limiting your future options? What is driving your behaviour?

2. Understand Your Triggers

Different cultures and societies have varying pressures. Whether it's the glamour of the West's Black Friday sales or the allure of Singles Day in China, global commercial events can be triggers. But beyond that, personal triggers like stress, societal pressures, or personal losses play a role.


Sisterly advice: there are a lot of companies out there working really hard to separate you from your money & distract you from your long-term goals. Sometimes, framing the interaction in this way can help you put purchases into perspective.

3. Budget and Track Spending

In a world dominated by digital transactions, it's easier than ever to lose track of expenses. Tools like Mint and YNAB can help you look at your spending, showing you trends or unexpected spending in an area. When we mention insights, what we want you to think is: I love treating myself to lunch, so it makes sense that I spend a lot in that category. Instead of: my lunch habit is costing me how much? The first reaction means you are getting joy from your money. The second reaction means you might be out of alignment with your spending goals.


CAUTION: be careful. In Canada, these apps use screen-scaping technology. This means that you need to share your login information with a 3rd party. When you share your login, you are voiding your bank’s fraud protection. We recommend inputting your purchases manually into these apps, or using regional financial apps that can help you monitor spending patterns like RBC's NOMI.


At Untangle Money, we only look at your recurring costs in your spending plan. This means that we aren’t too hard to set up, and we don't look at where you choose to spend your Flex Money. We help you look at your spending differently.


Sisterly advice: if you have your Flex Money from your Untangle MINI, you can divide the after-cost tax of your purchase by your Flex Money per hour, and you will learn how many work hours it will take to make your purchase. Tracking hours, instead of money spent, can help to reframe the purchase decision and make it easier to put the purchase into perspective.

4. Limit Exposure to Temptation

In the digital age, with global online sales reaching over 4 trillion USD in 2020, e-commerce is a significant temptation. Consider digital detoxes, limiting social media use, or using website blockers during vulnerable times. If you're prone to online shopping sprees, consider unsubscribing from marketing emails so you're not constantly tempted by sales and promotions. If you find yourself wandering into stores during lunch breaks or after work, try changing your routine to bypass shopping areas. If you get email notifications from stores, unsubscribe from these. You can resubscribe when you know you’re going to need to purchase from the store. BONUS: you may even get a discount when you resubscribe months or years later.


REMEMBER: we know exposure works, that's why companies pay so much for marketing. You probably didn't wonder if you needed (that Korean skincare cream or those sheertex leggings), until you saw 7 ads for it.


5. Implement a Cooling-Off Period.

Impulse spending usually works against your long-term goals. Give yourself time before making purchases. This not only reduces unnecessary spending but also combats the need for immediate gratification. Before making any non-essential purchase, impose a 24-48 hour waiting period.


This period allows you to make sure this purchase fits in with your overall short- and long-term goals, and if you still want to look for a coupon, shop around. See if you can find the purchase at a lower price. Can you find it second-hand? Is there a sale season coming up? Put it on a list to purchase during the sale. More often than not, you'll find that the urge to buy diminishes with time.


6. Pay with Cash

A study in the Journal of Consumer Research found that individuals spend less when using cash compared to credit cards. In countries like Germany, where cash transactions are still common, consumers tend to be more mindful of their purchases.


CAUTION: avoid this one if you're using cash to hide purchases from your tracking system. Again, this is about being curious about yourself. You know yourself best.


7. Declutter and Organize

Marie Kondo, a Japanese organizing consultant, popularized the idea of keeping only items that "spark joy." Going through your possessions can be a helpful experience.


It can feel like Christmas; you might find items you don't use or even remember purchasing. It can also be eye-opening to see how many unused or unwanted purchases you have made.


Pause with each of these items, and determine what you’re going to do with them. If you haven’t used them yet, it’s likely not worth the time and space that they are taking up in your life. If you can return them - do so. If you can sell these items on your local Facebook Marketplace, Craigslist or Kijiji, that's better than hanging on to them. (Depending on your area, you use porch pickup or meet at a local coffee shop to make these transactions safer). By decluttering, you're not only organizing your space but also reflecting on past spending habits.


8. Find Alternative Activities

If shopping has been your go-to activity for stress relief or entertainment, maybe it's time to substitute a new hobby. Consider taking up activities that are fulfilling yet inexpensive. Most cities have amazing walks you can follow. Resources like Lonely Planet are treasure troves of inexpensive entertainment. Other pursuits like reading, hiking, up-cycle crafting, or volunteering are worth exploring.


Sisterly Advice: Libraries are a treasure trove of free and low-cost activities, not just based on books. Many host talks. Some have multimedia creative rooms that you can book. Check out what's happening at your local library today.

9. What Do You Want For the Future You?

Globally, there's a move towards financial literacy. This is great because understanding how investing can help you live the lifestyle you want in the future is very important. It can be hard to create clear financial objectives right off the bat. Another way we've found useful is to imagine what you want for yourself in 10 years, in 20 years etc. and then do some research to figure out what that would cost.


Make sure to include retirement right away, even if it isn't on our horizon yet. Retirement is SO expensive. Most people, but women in particular; we need to start getting our money growing for us right away to afford the vision most of us have for our futures.


This does take work and the effort is worth it because having clear financial objectives can reduce compulsive spending and lower your anxiety around money. It gives you the 'why' behind what you are putting your money towards. Untangle Money can help with this, through our MINI financial plan.


Whether it's saving for a vacation, buying a house, or setting up an emergency fund, having a goal can redirect the urge to spend towards something more purposeful. Use a vision board and sticky note reminders on your phone and wallet so that you remember why you are focusing your spending.


Sisterly Advice: research shows that we can live with reduced spending for 3-5 years. If your goal will take longer to reach, you may need to reduce your base-line cost of living. Generally, we need to spend 18-22% of our take-home money on food, clothes, gifts and all the things that come up, or as humans, we are highly likely to reach into debt.


10. Educate Yourself

Platforms like Coursera and edX offer courses on personal finance and mental health. There are countless books (shout out to Shannon Lee Simons, whose books we adore), podcasts, and courses available that provide invaluable insights into managing money effectively. The more you understand, the better decisions you'll make.


We really like Your Juno, and Canadian Specific: Get Smarter About Money.


There are paid offerings as well. We like Female Invest, & Untangle Money (obv)


These are on our radar, but we haven't had a chance to try them yet: Janine Rogan's Wealth Building Academy & The New School of Finance (both in Canada) Dow Janes & Ellevest (USA)


Have you found a resource that you love? Let us know at team@untangle.money!


Sisterly Advice: keep in mind that a lot of generic guidelines are based on the lives of wealthy men and may not apply to women or the middle-income. We recommend working with firms specifically designed for women. Ellevest and Untangle Money have taken a deeper look at these guidelines and identified when they don’t work for women.

11. Seek Professional Help

Counselling and therapy are becoming more accessible globally. Therapists can provide coping strategies and insights into why one might lean towards compulsive behaviours. Professionals can offer coping strategies, provide insights into the root causes of your behaviour, and support your journey to financial and emotional well-being. A lot of companies offer employees mental health benefits. Check what’s available to you. Canada has a variety of free resources. Learn what's available in your area here.


Conclusion:

In the world we live in, the habit of overspending is deviating us from our short and long-term financial goals, and it's not just about being careless with money—it's a reflection of what's going on inside our heads and hearts. Our mental health can take a hit when we're surrounded by the temptation to buy more, thanks to all the gadgets and apps that make shopping a breeze. But the thing is, this ease of buying can sometimes lead to stress and anxiety when we overdo it.


Understanding why we feel compelled to spend is super important. It's not just for the sake of our bank balance—it's about taking care of our emotional well-being, too. The reasons we buy impulsively can often be traced back to seeking comfort, dealing with stress, or filling an emotional void. Recognizing these patterns is crucial because when our mind isn't in the right place, our spending habits can get out of control.


By taking a closer look at our spending, we're actually tuning in to our emotional health. Are we shopping to feel better or to fill a gap that we're not addressing in healthier ways? This is about so much more than money; it's about our overall well-being. Real wealth comes from being mentally healthy, emotionally balanced, and spiritually at peace.


So, when we start to untangle the emotional reasons behind our spending, we can begin to heal. We empower ourselves to create lives that aren't just financially secure but are also rich in mental well-being. Because after you reach a certain level of financial security, a calm and clear mind becomes the most precious commodity to hold onto.



 


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Financial independence is a huge part of being a strong, independent person, and it is our mission to help women and anyone who doesn't feel safe or welcome in financial spaces typically dominated by cis men set themselves up for financial success. At Untangle Money, we help women understand their (real!) financial picture and obtain financial guidance from people who actually, really get it; this is why we offer affordable options so that we are accessible to everyone. We would love to help you, too! Join the community of hundreds of other women looking to strengthen their financial well-being. You can check out our products and plans here or get in touch for a free consultation!

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