You may have thought to spring clean your house and your closet with the change of seasons but now's also the time of year to spring clean your finances.
"After a year of unpredictable expenses, now is a good time to take a closer look at where your money is really going and spring clean your finances," said NBC News senior business correspondent, Stephanie Ruhle. For many of us, 2020 shook up our normal spending routines.
"To get back on track, start by looking at some of the bad spending habits you may have picked up over the last year, including emotional spending and impulse buying," she advised.
As part of her On the Money TODAY series, Ruhle spoke with financial therapist George Blount to find out some strategies for taking control back when it comes to spending.
Many Americans have used online shopping as a way to cope with the stresses of the pandemic — let's call it comfort shopping. And while that jolt you get from clicking "buy now" may feel great in the moment, it can wreck havoc on our bank accounts.
"Spending, especially if its mindless or impulsive is a response to what an individual is going through," said Blount. He said that often the impetus to spend comes from our emotions. "If a person feels isolated or lonely it leads to a certain type of spending," he said. "If a person feels disconnected they may start planning for the future and buying things they hope to do to feel more connected when the pandemic is over."
Blount laid out some common emotions that can lead to overspending:
- FEAR: "I don't know what tomorrow is going to bring so I have to spend this money right now."
- PURSUIT OF HAPPINESS: "I think if I spend this money I will be happier."
- ANXIETY: Worry that causes hoarding OR you don’t spend and you over-save.
- UNCERTAINTY: That’s also where a lot of the hoarding or over-saving comes into play.
The first step to putting a stop to the overspending is to take ownership of what you've been doing, said Blount.
"First acknowledge you have developed these habits," he said. "Also acknowledge the good habits as well that have been formed in the pandemic. Before we can get to the bad, we should amplify the good."
Next, get an idea of the pace at which you're spending. If you see a pattern of impulse-buying, try instituting a waiting period before purchasing.
"Write ideas down and put them aside and see if they are relevant a week later then it's potentially something you should purchase," Blount said. "Doing this will prepare your mind to stop being impulsive."
So for example, if you think you want to renovate a room in your home instead of jumping online and spending money buying throw pillows and decor, write it down and come back to it a week later, he suggested.
Ruhle asked Blount to lay out the three questions we should all be asking ourselves before we make a purchase.
"Is it needed? Is it useful? What goal does it attach itself to?" Blount said. "If those three questions are hard to answer there is no reason to buy it." When we ask ourselves those three questions we are able to help our minds distinguish if it's a need or a want. "This also helps us all become more mindful," said Blount. "And when we are mindful, we aren't mindless in our spending."
If all else fails, try following Ruhle's number one tip for curbing your shopping sprees: "Click the unsubscribe link at the bottom of the email from the tempting retailers," she advised. "That way your inbox won't be flooded with advertisements and special offers." This may reduce the impulse to spend since what's out of sight is out of mind!