Personal finances are complex and involve more than just numbers, budgets, and bank accounts. Our perceptions, learned behaviors, stresses, and impulses influence our financial decisions, so it’s important to understand some psychological spending triggers in order to gain more control over our financial lives. This blog post will empower you to make wise and informed financial decisions when you know what drives your spending habits.
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Psychological spending triggers
There are three main psychological triggers when it comes to spending:
Spending trigger 1: Emotional spending
This is when rational decision-making goes out the window to make way for stress, boredom, sadness, happiness, or excitement to take the driver’s seat in spending habits. Emotional spending can be a source of comfort, distraction, or even a reward, which can make it difficult to stop spending emotionally. The first step to get in control of spending emotionally is to identify when it’s happening in the moment. Ask yourself: “Am I buying this because I’m sad/bored/excited?” “Would I have bought this item yesterday when I felt differently?”
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Spending trigger 2: Instant gratification
We live in a world where virtually anything and everything is accessible at our fingertips. Amazon Prime, Instacart, DoorDash, and other services that deliver goods and services quickly make it easy to spend money without thinking about the long-term consequences of those decisions. Combat instant gratification by practicing self-control and asking yourself: “Will I still want this next week?” “Do I really need this item, or am I just buying it because I want it right now?” “Is this purchase part of my budget or financial plan?”
Spending trigger 3: Social influences
Spending based on social influences happens when we spend money to keep up with others, meet societal expectations, or gain the approval of others. The rise of social media has brought with it more spending habits based on the opinions or expectations of others instead of spending based on our own personal values and needs. To combat this trigger, determine your financial goals and keep your focus on your goals by asking yourself: “Am I buying this because I genuinely want or need it, or because I saw someone else with it?” “Would I regret this purchase if I discovered no one else cared about it?”
Tools to manage spending triggers
Thankfully, there are tools available to help manage spending habits to keep you on track towards your financial goals. Here are some simple ways to manage your spending habits:
Track spending to identify triggers
Knowing where your money is going is a significant first step to managing your spending habits and overcoming the psychological triggers in spending. Through tracking spending, you will be able to identify patterns in your spending and even why you are spending the way you are. Fortunately, tracking spending can be simple with Simplifi by Quicken, one of our favorite tools for budgeting and finances. This tool tracks and categorizes spending automatically and gives you a real-time report of where your current spending lies within the spending plan that you created. Within the app, you can also see your paychecks, bills, subscriptions, expenses, savings, and expenses in one place.
Budgeting with a goal
When you have a goal you are working towards, like saving up for a new car or a vacation, it is easier to rein in spending with your long-term goals in mind. Crafting a budget is the quickest way to move toward achieving your financial goals because it puts spending in perspective. Another reason we love Simplifi by Quicken is that it creates a budget for you based on your monthly income, subtracts your bills and subscriptions, and generates a personalized spending plan that automatically adjusts as you spend. The budgeting tools inside of Simplifi by Quicken also accommodate any budgeting method you like, such as zero-based budgeting, envelope budgeting, 50-30-20, and more.
Maintaining discipline in budgeting
Keeping your budget at the top of your mind helps put spending habits into perspective and will help you build self-control and spend based on your values and not on emotions or social pressures. One of the keys to maintaining discipline in financial stewardship is getting real-time information about how much you have left to spend and how you’re progressing toward your savings goals. Adjusting your spending plan as you spend helps to keep you focused on your financial goals instead of giving in to your impulses. Simplifi by Quicken helps with all of this while sending alerts for unusual or unexpected transactions, upcoming bills and subscriptions, and when you’re near your spending limit.
Visualize financial data
Seeing financial data in charts and reports builds your confidence as you see your budget and saving plan working in a visual format. We love Simplifi by Quicken’s automatic and customizable reports that quickly give a snapshot of our financial status so that we can adjust our spending habits to align with our goals. This visualization of your finances will help guide you as you make financial decisions and motivate you toward reaching your goals.
If you struggle with psychological triggers when it comes to spending, you are not alone, and you can learn to identify and overcome these barriers to achieve your financial goals. At True Assisting, we want you to be empowered to understand and modify your spending habits when necessary, while providing you with tools that can help you along the way.
If you are looking to change your financial habits, we can’t recommend Simplifi by Quicken or our FREE Financial Planner enough. Check them out today!
