The mind tricks to combat your dangerous spending habits today, from ‘social debt’ to impulse buys

FROM social debt to impulse buys, reboot your relationship with money with these ace hacks by Susan Griffin.

That momentary thrill of a contactless tap of your card in exchange for a new facial serum, a treat for lunch or even a gift for someone else. . . Tap, tap, tap.

Before you know it, those “small” purchases leave you gawping at your bank balance in disbelief.

They happen mindlessly, but actually tend to reflect our mental state, priorities and aspirations.

“Money is emotional,” says Vix Leyton, consumer finance expert and host of the False Economy and Spendology podcasts.

“Instead of pretending it is all spreadsheets and logic, we should admit our habits, spending and saving plans are all affected by what’s going on in the rest of our lives,” she adds.

It’s why money problems aren’t exclusive to those on a low salary.

“I have met people with good salaries who still feel constantly broke because their spending is driven by impulse or pressure. Conversely, there are people with very little money who manage it with such creativity that they feel more in control and live better than someone earning five times as much,” explains Vix.

We all have bad, burdensome financial habits.

The goal isn’t to chase wealth but financial wellbeing, adds Vicky Reynal, financial psychotherapist and author of Money On Your Mind: The Psychology Behind Your Financial Habits.

“Financial wellbeing is a sense of security, control and confidence in our financial situation,” she says.

With that in mind, here’s how to fix some common spending habits. . .

Peer pressure

Have you ever eaten out with friends and had to stifle shock when the bill arrives? Splurged on a brand because “everyone’s wearing it”, or booked a fancy hotel because the photos would look good on Instagram?

Back in the day, it was called “keeping up with the Joneses”. Today, it’s called “social debt”.

“It is the emotional pressure we feel to spend to keep up with others, saying yes to things we either don’t want or can’t afford, driven by the fear of being judged, excluded or labelled ‘tight’,” says Vicky.

“This pressure often drives people to overspend to avoid conflict or an internal discomfort of not being the best version of themselves in the eyes of others.”

If this sounds like you, Vicky suggests asking yourself whether you were always the type of person who desperately tried to fit in, felt left out, or are a people pleaser who does anything to avoid conflict.

“Recognising this as social pressure, rather than a personal failing, helps you step back and ask: ‘Am I spending because I want to or because I feel I should?’” says Vicky.

“Practical steps that can help include pausing before buying, asking yourself: ’Do I think this purchase will make me more likeable or help me fit in, or am I likely to regret it?’ Leave items in your basket for 24 hours, pay in cash to reconnect with the ‘pain’ of spending or set limits with a trusted friend.”

Impulse buying

An impulse purchase is thrilling. But when it becomes compulsive, it’s dangerous.

The likelihood is you want to feel less sad, lonely, stressed and/or inadequate, and companies know this.

“Marketing is so effective, it can override any rational thought about whether a product will actually make us happier,” says Morgan Housel, author of The Art Of Spending Money: Simple Choices For A Richer Life.

“It’s easy to tell ourselves a quick story about how buying something will fix our problems. ‘This shirt will make me happier’, is much easier to wrap your head around than: ‘Maybe I need a new career’.”

To break the cycle, try to understand why you feel the urge to spend.

“Identifying the emotional driver can help you find healthier alternatives,” says Vicky. “For some, keeping a spending diary reveals patterns, like shopping after a stressful day. But if you’re using buying things to cope with difficult feelings, you may be trapped in an unsustainable pattern of behaviour.”

Extreme Saving

Unhealthy financial habits don’t always mean mindless splurging.

An obsession with penny-pinching can also be detrimental to your wellbeing.

“Some people get used to seeing their net worth go up, up, up, as they save, save, save – and they can’t bring themselves to ever go in the other direction, even when it’s appropriate. At that point, money is not a tool to live a better life, it’s something that’s controlling you,” says Morgan.

This pattern is sometimes described as “financial anorexia”, according to Vicky.

“It is a compulsion to deny oneself the pleasures money can bring, rooted in feelings of guilt, shame or a deep fear of ‘wasting’ money. While thrift can be wise, taken too far it limits one’s enjoyment of life, can strain relationships and leave people emotionally isolated.”

Where to start? Try small, deliberate experiments.

“Treat yourself to something modest and sit with the discomfort, rather than avoiding it. It can also help to reframe spending not as ‘waste’, but as investing in your wellbeing or in shared moments with others,” says Vicky.

“Be curious about why spending feels so difficult. Notice whether it’s harder to spend on yourself than on others, or whether guilt quickly follows purchases.”

Mistaken priorities

When you know what you truly want, it motivates you to keep your spending on track.

Identifying your priorities means: “You can start working out what you ought to be saving, and consequently, where you need to stop spending, to get the life you want,” says Kim Stephenson, a financial adviser turned chartered psychologist.

He recommends doing the “First 15” task to help you better understand your financial motivations.

“Imagine you’ve won £25million.

“Make a note of the first 15 things you’d buy.

“Then go through it and see where the desire for each thing on your list comes from.

“It might be things to impress family and make mum and dad proud, stuff to give the kids to make up for not having things yourself, or for image – because when you’re rich, you’re supposed to possess certain things,” he says.

“It can be a revelation to discover that only one or two things are what you really want, as opposed to how much you are driven by outcompeting others or making up for perceived deficiencies in your life.”