Chosen best of the web by Globe and Mail personal finance columnist Rob Carrick
Overspending is a common problem for many people; it creates debt, anxiety and relationship problems, even among high income earners. All too often, people’s spending habits seem to rise to meet – and exceed – their incomes. So why does this happen? What compels people to overspend when they already have the items they truly need? The answer lies deep within each person’s spending personality.
Recently, I read Dr. April Benson’s book I Shop Therefore I Am, and was fascinated by what the contributing authors uncover about the emotional and psychological factors influencing our buying habits. I thought it would interesting, and beneficial, to touch on the six key spending personalities they explore: image spenders, bargain hunters, collectors, compulsive shoppers, co-dependent spenders (a.k.a. gift-givers) and bulimic spenders.
For most people, their spending personality can influence purchasing decisions on a daily basis, and can sometimes have adverse affects on their personal and financial affairs. If you feel your spending has a tendency to get out of control, it can be helpful to consider which personality best matches your own. As you read through, you may perfectly fit into one category, or more commonly, may feel that you share traits with several of the personalities.
For image spenders, appearance is everything. They live well, dress well and are likely to pick up the tab for others in order to appear generous as well as prosperous. Image spenders have an inner drive to be admired and seem powerful. It’s common for them to belong to prestigious clubs and associations, fly first-class and reserve the best tables at restaurants. When opening a new business, an image spender will probably be prematurely concerned with having pricey office digs, expense accounts and glossy marketing collateral, even when they’re just starting up. Whether they can afford it or not, they will give lavish gifts, and lend money even if there’s a good chance they won’t get it back and even if they already owe money on their credit cards.
As the name implies, bargain hunters are in it for the hunt. They view getting a good deal as a victory, regardless of whether they actually need the product in question. For them, finding a bargain isn’t simply about being a conscientious shopper; bargain hunters are in it for the thrill of finding a great steal, and often get a kick out of “besting” the seller by talking them down from their original price. Many times, bargain hunters don’t even care about the item they’re buying, as long as they can buy it cheaply. Unfortunately, all those cheap purchases can add up, and when the bills come in at month’s end, these shoppers often get more than they bargained for.
Collectors have a deep well of knowledge about a particular subject area, whether it’s comic books, antiques, dolls, model cars – you name it! They enjoy the status and admiration that comes from being an expert and having an exclusive collection. Most collectors get a feeling of bliss or elation from making new acquisitions. There’s nothing wrong with that in and of itself; collecting as a hobby can be very satisfying, and if the items in question aren’t too pricey (for example, a friend of mine used to collect tea cans), there’s little harm in it. But sometimes collectors seek more than just satisfaction. They’re driven by a hunger to expand their collections, and that appetite doesn’t go away no matter how many acquisitions they make. The collection trumps all other needs and desires, and that can take a heavy financial toll, particularly if the items they covet are on the high end of the scale – say, expensive shoes or vintage wines.
Compulsive shoppers hit the stores because they have an unconscious desire to avoid unwanted feelings. For them, shopping provides a distraction from negative things like depression, anger, fear, loneliness or boredom. When they pull out the credit card or Interac Flash, they’re looking for the sense of well-being, excitement and control that often accompanies a shopping spree. Unfortunately, once compulsive shoppers get home with their new goodies, they’re usually hit by feelings of guilt, anxiety and confusion about their behaviour, not to mention disappointment that the spending didn’t resolve their initial negative feelings. This can set off a nasty cycle that sends the person right back to the malls.
Co-dependent spenders (a.k.a. gift-givers)
Wanting to make others happy is something most people can relate to. Who doesn’t like seeing a friend or family member’s face light up when they receive the perfect gift? In its mild form, co-dependent spending can be as simple, and innocent, as wanting to give joy. Things get a little darker, however, when gift givers are driven to doll out lavish presents so they can gain attention, friendship or love, even if their gifts go over budget. (Think of those holiday shoppers who always go way overboard, offering presents that are far too extravagant or unique for the recipient to possibly reciprocate.) This type of co-dependent spending often leads to disappointment and resentment when the receiver doesn’t respond in the way the giver intended. In these cases, gift giving can be less of an act of generosity and more an act of control – one that can be financially draining for the shopper, and emotionally draining for both the giver and the receiver.
Bulimic spenders feel compelled to spend their money as quickly as possible so they can be rid of it. For example, they might quickly blow through any extra cash left at the end of a pay period. Bulimic spending can also present itself when people come into an inheritance or win the lottery, and feel the need (consciously or unconsciously) to shed those extra dollars so they can return to their normal lives. In either case, this kind of binge spending is all about eliminating excess, but it doesn’t allow for the fact that the spender could benefit from holding onto their money and investing it for a rainy day. Usually, once all their money is spent, bulimic spenders are overcome by a strong case of buyer’s remorse, and sometimes even profound embarrassment and disappointment about their behavior.
Which spending personality are you?
The desire to impress and compete, or to feel good and loved, is a powerful motivator. Let’s be honest; even the smartest among us are likely to sabotage budgets in the face of strong emotional needs.
If you feel that your spending sometimes gets out of control, you can help yourself by identifying which personality you relate to most. Knowing what kind of spender you are will enable you to understand your underlying needs and spending triggers, and can empower you to break down long-established patterns and habits. Once you do that, it becomes much easier to curb your spending and stay on track, so you can make better choices for your budget – and your life.