Here’s What Your Money Habits Really Say About You

|Posted by | Columns, Psychology of Money
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How you spend your money says a lot about you. Singaporeans need to be aware of these money habits to identify how and where we are ruining our finances.

Funny Money is a column by Alevin Chan that examines our irrational relationship with money. Why do we spend more than we have, even though we know better? Why do our wallets automatically open at the merest hint of a sale? Why do we scrimp and starve for days, only to blow through a weekend champagne brunch? Join us as we explore why we suffer from funny money.

Habits are automatic actions and decisions that help us process the myriad encounters of our everyday lives. Because money habits are based on our unique relationship with money, we each have a particular set of financial shortcuts that we default to – often without thinking about it.

Money habits arise from the beliefs and attitudes we hold towards money, which means that our money habits are also good signposts that we can use to examine our relationship with money.

Just like with all habits, good money habits that are healthy and helpful need no intervention. However, some money habits are dysfunctional, and the sooner we dismantle them, the better.

Here are four money habits that could hint at unresolved issues which are causing you to ruin your finances.

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Spending Frequently On Friends May Indicate Social Anxiety

There’s nothing wrong with buying your friends a round or two (especially if it’s been that kind of week), or quietly settling the dinner bill on your way to the restroom. But if you find yourself frequently (and loudly) picking up the tab, or buying things for your friends “just because”, you could be suffering from social anxiety.

Specifically, you’re feeling insecure about your social status, and so use gifts and treats to boost your own standing.

In the case of impromptu and unnecessary gift giving – or busting your budget on an extravagant Christmas or birthday present – you may be engaging in social value spending. The UK’s Money and Mental Health Policy Institute notes that social value spenders give money or gifts in order to boost their self-worth.  

And as for that grand announcement before entering the restaurant that you’d be paying for tonight’s meal (yet again)? You’re anxious for others to think more highly of you, so you pick up the tab, as a way to earn the admiration of your peers. This also hijacks the social gathering, making it all about how nice and generous you are.

Even if you can afford the frequent treats, know that almost all of it is unnecessary, and you’re simply wasting your money. The sad reality is, social anxiety can cause us to keep on buying treats and gifts, even if we should fall into debt doing so.

Instead of continuing to damage your finances, recognise that your money would be better spent on healing the root cause of your social anxiety. You’ll be happier and healthier, both in mind and wallet.

Tracking Finances Obsessively May Point to Feeling a Loss of Control

You may know someone who knows exactly how much they spent last week – down to the last cent. They use no less than 3 different expenses tracking app, know exactly much more they have to spend to redeem their next free flight, and maintain a spreadsheet that tells them when their coupons expire. That person may even be you.

Keeping on top of your finances is all well and good, but it’s possible to take the behaviour entirely too far. When tracking your finances starts looking less like good housekeeping, and more like serial killer fastidiousness, you might want to talk about what’s really bothering you.

Becoming hyper-organised about your finances could indicate difficulty with accepting the unpredictability of life. Psychology lecturer and writer Claudia Hammond note that some people with eating disorders display a corresponding obsession about their money.

“Some people find it hard to deal with the unpredictability of life, and want to control any aspect of it that they can,” Hammond said in an article published by the Financial Times.

She added that instead of trying harder to get more control, sufferers should instead explore ways to get comfortable with ambiguity.

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Hoarding Money May Reveal A Need For Security

We’re not talking about mere penny-pinching here. We’re talking about people who continue to stockpile their cash, even if they would be much better off spending it.

(Think about your elderly spinster aunt who refuses to spend more than S$5 a day on meals, even though she has no dependants and a more-than-ample CPF Life payout.)

Money can mean different things to different people, so it’s not uncommon for some to look upon money as a symbol of security. This, then, causes them to hoard money as a subconscious reaction whenever they feel insecure.

Hoarding money creates hardship for yourself and others, and could lead to fights that could increase your stress and anxiety. For example, family members and friends could distance themselves in an effort to preserve your relationship, which could, in turn, cause you to feel even more abandoned.

Instead, discuss with a trusted party why you feel the need to hoard money. Also consider speaking to a mental health practitioner to explore more constructive ways to attain the feelings of security you seek.

Buying Things on Discount May Imply Low Self-esteem

No, we’re not saying that people who don’t love themselves only buy discounted things, because they’re not good enough to deserve full price, somehow.

What we’re saying is if the presence of discounts drives you to buy something – even if you don’t need or want the item – you could be struggling with low self-esteem.

You might recognise making unwanted or unnecessary purchases as a form of compulsive behaviour, which is a common habit displayed by individuals who struggle with self-esteem issues.

On the surface, getting something for less than full price confers a mild emotional boost; you found a bargain, thereby scoring a small victory.

However, the minor uplift you get from your purchase will soon fade, leaving you with a depleted bank account, or worse, rollover balance on your credit card.

Hence, if you find yourself hooked on buying unnecessary things just because they are on discount, you might be better off shopping for a good therapist instead.

Find yourself always missing out on great credit card rewards, or wasting money on high-interest payments? Make a habit of comparing credit cards or personal loans at SingSaver.com.sg to quickly find the best credit cards and lowest-interest personal loans – for free!

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15 Cognitive Biases You Didn’t Know Were Ruining Your Life


Alevin ChanBy Alevin Chan
A Certified Financial Planner with a curiosity about what makes people tick, Alevin’s mission is to help readers understand the psychology of money. He’s also on an ongoing quest to optimise happiness and enjoyment in his life.