By Sandy Botkin Special For USDR
One of my friends was complaining about his wife’s spending. He then asked her if she knew what the opposite of spending was. Her answer: “charging.” He knew he was in trouble. One main reason people have incurred a lot of debt is due to their desire for “instant gratification.”
The key here is to understand a basic financial truth: spending is emotional; and nothing gets people more emotional than money. I see it all the time. This is particularly true when there is a death in the family. Beneficiaries go crazy over the money and the assets. I have seen whole families stop talking to each other over a fight about furniture or a ring.
It is thus imperative that people need to be much more logical about their money and less emotional; however, this is easier said than done. We need to focus on what we are spending and why we are buying a particular item and try not to be in denial about it.
Ask yourself: How many times have you or your spouse bought something because you were upset or stressed out? This type of consumerism is called “shopaholicism.” How many times have purchased something extravagant after an argument?
I don’t think people can ever totally stop emotional purchases. Thus, set up a monthly savings budget for it, and don’t spend more for these types of purchases than the budget allows.