Understanding money is simple.
Even if you don’t know the more complex aspects of, say, index funds or ROIs, everyone generally knows what it means to be good with money. Spend less than you earn, save for the future, stay out of debt. This is because money principles are simple; it’s human psychology that’s complex.
In fact, when we’re talking about money management — like many things in life — we are actually talking about our psychological relationship with money, for which there is an extremely deep pull.
There’s nothing quite like money in that it touches every level in our hierarchy of needs, which almost nothing else does. Money is required for our basic needs (survival) but it’s also a signal of status (belonging) as well as essential in building the lives we want to live, and becoming the people we want to be (actualization).
That’s why so much money advice—similar to diet, or relationship advice—doesn’t work. Yes, it’s correct by principle, but in practice it’s flawed because it’s either not sustainable, or it addresses a surface-level issue without understanding the actual problem just beneath.
In the case of compulsive overspending, the problem is almost never that a person lacks self-control and almost always that the person has a fundamental need not being met through which the overspending is directly related to.
People exhibit self-control when they want to exhibit self-control.
In fact, people generally do what they want to do, pretty much at all times. It’s one of the fundamentals of understanding human behavior: people are always motivated by something, and primarily, it’s their own wants and needs. They might not say what those are, but their actions will always reveal it regardless.
In this case, overspending is probably not the result of you being a total idiot that can’t get a grip on your credit card spending.
When you’re addicted to clothing shopping, it’s usually not because you actually feel you need a thousand pieces in your wardrobe. It’s usually because you are so uncomfortable with your body or status, you project that problem onto the clothes.
You’ve gotten clothing that has made you feel really good about yourself before, so a feedback loop was developed, and now you think that you’re always one more piece away from feeling empowered and at peace in your own skin.
When you’re addicted to spending at restaurants, it’s not usually because you’re so lazy that you can’t be bothered to cook a single meal ever. It’s usually because by the end of the day or workweek, you are so overspent and exhausted running yourself dry doing things you do not actually want to be doing, you need to essentially give yourself a hit of energy in the form of a food high, one that’s going to temporarily mask the consistent unhappiness that’s lingering.
That’s what makes the rush of ordering out again so compelling as opposed to the few more minutes it would take to prepare something fresh at home: it’s that instantaneousness that gives you relief.
When you’re addicted to living just outside of your means, it’s not because you’re a fool that’s fallen victim to lifestyle inflation, it’s because you are still under the impression that richness = wealthiness, and that your success is shown not by what’s in your bank account, but by how much you can afford to lease and manage each month.
This is usually prominent in people who actually have a deep and unmoving sense of being a failure, even if they are actually accomplished by other means.
Your bad spending habits are actually pointing to an undeveloped part of your psyche.
Though you might think that this article was going to conclude by me chastising you for buying a $5 latte or shopping, ever, it’s actually the opposite.
In fact, the only way to get really financially healthy is not to reduce your life to doing the bare minimum in order to save the absolute maximum. The solution is to take an honest and objective look at your needs and start meeting them with more efficiency.
If your problem is low self-worth, it’s time to start investing in what will make you feel worthy. Maybe that’s a few amazing time pieces that are tailored well and fit great. Maybe that’s a few sessions of therapy, or getting professional photos taken for a confidence boost.
If your problem is feeling way too strung out, it’s time to start investing in your own rest, relaxation, or even considering a work shift that will better suit your wellbeing. Instead of spending on things that numb out your exhaustion, you can consider taking more mental health days, reducing hours, or even saving for a big, exciting trip that invigorates you.
If your problem is lifestyle inflation, it’s time to start investing in what would make you feel genuinely successful. Maybe that’s a side gig producing and selling your art, or maybe that’s doing some serious reflection on what you believe makes someone worthwhile and valuable to others, and how you may better embody that in your own life.
If you keep trying to fix a problem at the surface level, you’re going to dig yourself deeper and deeper into it.
The answer isn’t that you just need a stricter budget, it’s that you need more self-awareness. You need to better understand your needs so that you can heal and resolve what’s really going on within you.
When you do this, you will find that your goals start to align more naturally.
It’s not a fight to try to convince yourself not to ever eat at a restuarant or buy new clothes. Rather, you’re doing it with intentionality — giving yourself an appropriate amount of space in your budget to do what you desire to do in life—instead of being controlled by uncomfortable impulses.
When something shifts within you, something shifts around you.
Not the opposite way around.