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After everything that we have been through, we all know the importance of financial management. This is a lesson that we need to learn if we want to keep ourselves from being in a financial crisis once more.
One of the most important lessons that we will learn in money management is how to be a smart spender. Your spending habits has the power to make or break you. Either it will bring you towards financial security or pull you down into a debt pit.
Like the holidays for instance. How can you rate your holiday spending? Did you successfully adhere to your budget or have you gotten yourself into some serious debt? If you were a smart spender, you should have been able to stay away from holiday debt easily.
But with all the marked down prices, the people going crazy over shopping and the bonus that you got from work - keeping a tight lid on your spending is easier said than done. We are living in a consumerist society after all. You can expect that everywhere you turn, you will be encouraged to buy, buy, buy!
Compulsive buying is a real and dangerous addiction. It can ruin not just your life, but that of your family as well. Your past exploits can ruin your present and future endeavors. So you need to seriously consider if you or a loved one has the signs of not being a smart spender.
Consumer spending in the country have steadily gone up over the years. TradingEconomics.com compiled a couple of statistics that show how spending have steadily increased over time.
Spending increased by $187 billion from Q3 of 2012 ($10.54 trillion) to Q3 of 2013 ($10.72 trillion).
Spending in every quarter of 2013 also showed a steady increase: Q1 $10.64 trillion, Q2 $10.69 trillion, and Q3 $10.72 trillion.
Growth from ten years ago (Q3 of 2003) is at $1.79 trillion. Consumer spending in 2003 was only at $8.93 trillion.
The only time that consumer spending declined was from mid 2008 to mid 2009 - which was during the height of the recession. But after that period, people started to spend more money on various items once more.
Even WebMD.com, an authority site on medical information, acknowledges that compulsive shopping is a real and dangerous condition. Coined as “shopoholism” medical experts know that this is as real as an addiction to drugs or alcohol.
An article published on the site reveals that people who do not have control over their impulses are considered to be an addiction. If you do not have control over your shopping impulses, then you may be addicted to buying more than what you should. Here are some highlights from the article.
“In America, shopping is embedded in our culture; so often, the impulsiveness comes out as excessive shopping,” Donald Black, MD, professor of psychiatry, University of Iowa College of Medicine.
“Some of the new evidence suggests that some people, maybe 10%-15%, may have a genetic predisposition to an addictive behavior, coupled with an environment in which the particular behavior is triggered, but no one really knows why,” Ruth Engs, EdD, professor of applied health science, Indiana University. “Individuals will get some kind of high from an addictive behavior like shopping.”
“Impairment can occur because the person spends time away from home to shop, covers up debt with deception, and emotionally and physically starts to isolate themselves from others as they become preoccupied with their behavior,” Rick Zehr, VP of addiction and behavioral services, Proctor Hospital at the Illinois Institute for Addiction Recovery.
Here is where it all gets to be difficult. Being addicted means you cannot decide for yourself if you are a smart spender or not. Those addicted are usually in denial of their condition. Someone always has to step in to tell them that they are compulsive shoppers.
Signs you are not with a wise spender
Experts suggest that people should watch out for signs that a person is not a smart spender. Whether it is you or another person in your home, you need to be able to spot the telltale signs. It goes beyond paying in cash or credit.
ShopaholicsAnonymous.org provided a compilation of statistics about compulsive shoppers in the country. Here are some of them:
Compulsive shoppers in 2008 reached more than 25 million in the US.
The Stanford University Landmark Study revealed that there were 17 million compulsive shopper in the US. Men and women are also equally compulsive shoppers. Overshopping is usually caused by poor budgeting and saving efforts.
Psychology Today reports that the number one reason for relationship stress is money. It oftentimes lead to separation.
Time reports that the credit card debt of consumers are mostly unnecessary purchases.
While it may be hard to spot, you can observe yourself for the signs that you are more of a spender than a saver. Here are some of the characteristics that you can observe about yourself or a loved one.
Having a hard time or intentionally not following rules.
Feeling pride when you just ripped off people.
Cheating in tax or financial forms.
Keeping purchases a secret.
Inability to answer a direct question without being evasive.
Preferring to make rules for others - but cannot follow it themselves.
Sense of self-righteousness.
Likes to hoard during sale events.
Probably the most important sign that you have a spending problem is when you spend more in credit than you do in cash. Credit cards will not give you as much guilt trip as it would when buying in cash. You need to consider these signs if you really want to end up being a smart spender and not the opposite.
These characteristics are not definitive of a compulsive shopper but you have to know the person to truly define if they are smart shoppers or not. Observe and look at other factors too. For instance, if it is keeping you from fulfilling your budget goals, then this needs to be explored further. And, being an addictive condition, it has to be approached carefully to avoid ruining any relationship.
Can you change a spender to be a saver?
The big question is this: is it possible to change a spender and make them a saver? If there are chance for them to stop being an impulsive shopper to be a smart spender?
The answer is yes. It will be difficult, but it is not impossible. Drug and alcohol addicts have success stories and shopaholics can still be saved to become savers. Here are some tips that can help you and your loved ones work through this problem.
Accepting the problem. This is ideally for the person with the bad habits but it goes for the rest of the family too. If there are debts already incurred, just let it go and stop blaming each other.
Supporting each other. Debt can drive you apart but only if you play the blame game. No matter who is at fault, you need to give each other a chance and solve this together. Fighting will only make things worse.
Get professional help. It can be a psychiatrist to help with the impulsive habits or it could be a financial expert to help fix your finances. Usually, the expert can give you insight and techniques that would never have dawned on you.
Solving the shopping habits will help you turn your finances around. Being a smart spender is where you can take a more action about this problem.
Here is a video from National Debt Relief that will help you lower your bills in your household - regardless if you have a spender in the family.