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Why you won’t regret cutting back on your spending

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Why did I buy that?

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A coffee first thing in the morning after a bad night of sleep. A packet of mints after that burrito you bought at lunchtime. An online purchase during the latest Amazon sale. Spending money isn’t wrong. We can’t avoid it, but what’s worrying is the alarming number of us who don’t realise how we’re spending our money.

With phrases like ‘retail therapy’ and shopping now a common leisure activity, it’s no surprise that we’ve developed a desire to spend money to get what we want now without really thinking about it.

We’ve all had to deal with the guilt of buying something we don’t really need but doing so anyway.

So, why do so many of us do this? It’s all down to our brain. When you see something you want, it triggers the nucleus accumbens part of your brain. This patch of tissue is active when you receive a reward e.g. through food or money. When you then see the price of something, this stimulates a part of the brain associated with pain. If you look at the experience of shopping for those who are addicted to spending, they’ll often feel the pleasure of a purchase more than the pain of the price (or they may just be blind to the price and focus on satisfying their need immediately). On the other hand, thrifty individuals are more sensitive to the pain of the price and find it easier to move on from the purchase or find a better deal elsewhere.

When you see something you want, it triggers the nucleus accumbens part of your brain. This patch of tissue is active when you receive a reward.

Hack your brain to stop spending unconsciously

All the knowledge in the world about how your brain works is no good unless you change your behavior. Here's our guide:

Track your spending. Tracking your spending will help you become more aware of when, where and how you spend your money. It sounds simple, but it’s harder to implement when you don’t note down what you’ve spent immediately after the purchase, hold on to receipts or look at bank statements.

Track your saving. Turn saving into a more pleasurable activity by tracking how much interest you’ve earned and tracking how much you have accumulated on a regular basis. Recognizing your achievements is key in sustaining behavior change.

Consider opportunity cost. When you’re about to buy something, consider how much you’re going to use it or what else you could do with that money instead. You may be able to take that trip you’ve been talking about for months with your partner or you could help a business with its cashflow problems by putting your money into Funding Circle. Read more about peer-to-peer lending here.

Plan your spending. Every time you think of something you need or want add it to your wish list. This way you won’t forget it and when you come to review the list you may realize that you no longer need it. Plan your meals for the next few days, create a list of groceries for the meal plan and then stick to it when you go shopping. Try to also avoid being hungry when going to the shops for groceries.

Acknowledge what you already have. Go through your possessions regularly. Declutter, reorganize, donate, sell and dispose of anything you haven’t used for 12 months. Why 12 months? When it comes to clothing you’ll have gone through all the seasons and have an idea of what you wear throughout the year. If you feel overwhelmed by how much you own and you want to downsize then use techniques to break up the big task. My favourites include The Minimalists and Zen Habits.

Use the 30-day rule. Don’t let your brain decide right now whether an impulse purchase is right. If you haven’t planned for something but feel that you want it right now, ask yourself the following questions: Do I need this? Can I afford this? Have I looked elsewhere to see if I can buy it at a better price? If you can’t say yes to all three of these questions, don’t buy it.

What else do you do to help you stay conscious about spending?

If you enjoyed reading this article, you may enjoy the following articles by Maureen McGuinness: