By: Natasha Archary
Financial journalist and author at Maya on Money, Maya Fisher-French joins Gugulethu Mfuphi on Kaya Biz to share insight on the psychology of overspending, and share some practical steps that can help to curb going over your monthly budget.
The impulse to spend money even if you didn’t plan to can be difficult to resist and boils down to financial discipline.
“It is also about what you’re trying to achieve, and whether your impulsive spending habits is sabotaging that goal, more than conditioning yourself into the mindset that you simply cannot have it.
South Africa is not particularly a nation of savers, and this has I think, a lot to do with credit extension.
For a country of our development, we have a lot of easily accessible credit available, compared to countries in the same developmental category as us, such as Brazil, China and India.
These two countries have a substantially better savings rate than South Africa, and they have less access to credit.”
Maya Fisher-French on the psychology of overspending
Maya says South Africans are spoilt for choice when it comes to purchasing on credit, with loans from banks, or store cards for groceries, clothing, and other essentials, making it easier for us to buy things on credit and worry about paying it back later.
The same money that South Africans use to pay off short-term debt is where all our potential savings and wealth creation lies.
Touching on emotional spending, Maya tells Gugulethu that as humans we either eat for reward or spend for reward, but need to be mindful that in the moment you feel better about what you’ve purchased, but then you feel terrible stressing about how you’re not going to pay off that debt.
“Scientists have actually studied this phenomenon and found that when we’re impulse buying, your brain releases dopamine, which is the same chemical that is released when someone takes cocaine.
Which gives one a type of ‘high’, but what is important to note is that when we shop, it’s the anticipation of owning the object that gives us that kick.”
Maya says once you own whatever it is you’ve purchased, the dopamine levels drop and people who overspend will then move onto the next thing they need to buy to feel that high again.
Practical steps to stop you from overspending
Leave your credit cards at home when you go out
If you’re overspending, you might want to consider leaving your credit and debit cards at home when you go out. Instead take a small amount of cash with you, which will push you to only make a purchase within that limit.
Ask someone to hide your cards
In the time it takes you to find your hidden cards, you can ask yourself if you really need to make this purchase.
Don’t use your credit cards like a debit card
Using your credit card is basically you making use of money you do not have. Stop using your credit cards to pay for small, everyday purchases such as your morning coffee, lunch or even petrol when filling up.
Create a “needs” vs “wants” list
Ask yourself if you need this or want it. If it’s a necessity, something you cannot do without because of convenience, safety etc. then it’s a priority. But, you have to learn to balance your needs and wants and make sure you’re not placing every purchase under your needs list.
Find other sources of happiness
A new pair of boots is only going to make you happy temporarily, and once the novelty wears off, you’re back to feeling meh. So, find other sources of happiness, whether it’s going to the gym, taking a stroll to watch the sunset, cooking a meal for yourself, reshape your association with material happiness.
Listen to the conversation on Kaya Biz:
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