I’ve mentioned this before, but one of my favorite parts of grad school was learning about human behavior. All people think, behave, and react in very predictable ways, no matter how much we try to convince ourselves of our uniqueness.
As a therapist, it’s awesome to say things like, “Let me guess – she said X and you reacted by doing Y,” and get The Look of Amazement. The one that says, Wow! How did you know? You must really understand where I’m coming from! And while I love astounding people with my magical therapist powers, it’s actually very simple to figure out how a person will behave in a given situation once you know him or her.
All behavior serves one of two purposes: (1) to get something, or (2) to avoid something. That is the single most important sentence I learned during my education. And it’s the one I finally applied to my own life to figure out what the heck I was doing financially.
Some people will read that statement and immediately start looking for loopholes. Go ahead – it’s not possible. No matter what you do, you are gaining some kind of benefit; otherwise you wouldn’t do it. People aren’t big on doing things for no reason, even though some of their actions may seem random. Understanding the motivators behind your financial behavior is the first step in figuring out where your money goes and how to hold on to it.
Spending to Get Something
Obviously when you spend money, you get something. Groceries, a pair of shoes, a car… But that’s not what I’m talking about. What are you really getting out of trading your hard-earned cash for goods or services?
Acceptance. Many people buy things in order to fit in with their friends, family, or coworkers. If that wasn’t true, things like Ugg boots, sushi, and Avril Lavigne wouldn’t exist. (And what a fabulous world that would be!) It’s human nature to want to fit in, but sometimes we pick strange ways of doing it.
Happiness. Whoever said money doesn’t buy happiness was a damn liar. I know money ALONE can’t give you lifelong happiness, but it sure helps sometimes. I won’t pretend I don’t get a level of joy from things like my beloved iPhone, my dogs, and my enormous collection of books. All of those things cost money, and all of them are worth it to me. They won’t keep me happy forever if everything else goes to shit, but they’re a nice start.
Escape. Why do people drink or use drugs? Because they want to escape from everyday life. Same goes for any other addiction – sex, gambling, food, overspending, etc. For me, spending money was definitely an escape from other stuff in my life. Unfortunately, all the stress was waiting for me when I came down from my “high.”
Convenience. This one is HUGE for me. If I think I can save time and energy by purchasing a product, I’m all over it. If someone ever invents a device that allows me to shower, eat breakfast, and check email at the same time, I’m in trouble. But the problem with convenience is its price tag – sure, it’s easier, but your wallet will feel the difference even if you don’t.
Spending to Avoid Something
I think it’s much easier for people to think about what their behaviors get them than what their behaviors help them avoid. We’re conditioned to face things head on and deal with them, but how many of us do that 100% of the time? No one I know.
Reality. This fits in with escaping, as I mentioned above. TV, video games, movies, books, and gadgets all help us avoid whatever is stressing us out. Sometimes so much that we lose track of what’s really going on outside whatever screen we’re staring at. I’ve definitely been guilty of buying new gizmos when facing a difficult decision, like that helps anything. I also loved going out to eat when something stressful happened, like when I lost my job in 2008.
Consequences. Have you ever broken something and rushed to buy a new one before anyone noticed? What about replacing your kid’s dead goldfish before they get home from school? My personal favorite: going into more debt to avoid facing your debt. You know what I mean – bill collectors are calling, so you use a credit card to pay off whatever you owe. Or you take out a debt consolidation loan, the dumbest invention in history (unless you’re the lender who collects all the interest).
Discomfort. There’s a reason why Tempur-Pedic sells a bazillion mattresses a year and we see luxury cars all over the roads when society is broke. We justify purchases all the time because we want to be comfortable. Sometimes it makes sense – I’m not going to walk around shivering in my house to save $30 on my heating bill – but other times we are avoiding something that isn’t THAT big of a deal. Like the time I bought a fur coat before a winter trip to Chicago. It was on sale, but that’s beside the point. I was so scared of being cold I spent money unnecessarily. And I haven’t worn the coat since.
Responsibility. We’ve all heard of the midlife crisis. There’s also the concept of the quarterlife crisis – when we’re out on our own for the first time and feel the need to buy everything on the planet. In either case, people tend to go through moments when they want to be young again. But why don’t you ever see some 50 year-old man buying a skateboard or a bicycle? For some reason, when we remember our youth, we see it in terms of all the stuff we had instead of the memories we created. And all that stuff doesn’t make us feel young – it makes us feel old and bitter when we open the credit card statements.
What About You?
Think about your miscellaneous purchases for a minute. Not things like bills and groceries, but the things you buy that you didn’t necessarily need. What were you gaining or avoiding by making those purchases? I gave a few examples, but there are countless motivators that might apply to you. How can you use that knowledge to get your spending under control and meet your financial goals?