Has the Pandemic Made You a Compulsive Spender or Saver?

Wellness Check

Has the pandemic made you a compulsive spender or saver?

You’re not the only one who feels financially out of whack. Luckily, we all can overcome it.

By Bana Jobe

 

Did you pick up a few bad spending habits during the pandemic? You're not alone.

Some of us have turned to compulsive online shopping, buying way more than we need as a coping mechanism for emotional stress, which can lead to financial stress and debt and create more emotional stress. It's a vicious cycle.

On the other side of super-spenders are super-savers who are also experiencing post-pandemic money anxiety. People like those coupon clipper fanatics who will forgo buying essentials such as toilet paper until they can stack enough savings to get a rock-bottom price.

But who can blame us? With more than 52 percent of employees concerned about their financial health, it’s no surprise that many of us are turning to overspending or hoarding money as a way to feel more in control of our finances.

"The COVID-19 pandemic caused many consumers to reevaluate their finances," says financial expert Catherine Alford, the author of Mom's Got Money and co-founder of MillennialHomeowner.com. "Many people were able to save more money than ever, due to not eating out and a pause on federal student loan payments. Others lost their jobs and experienced extreme financial hardship. Ultimately, a global emergency should encourage all of us to be better prepared and to have an emergency fund on hand. However, it's still best to avoid the extremes of oversaving or overshopping."

If you're not sure whether you fall into either category—or maybe you're a bit of both—here are a few telltale clues, plus a few strategies to get back on track.

You may be an overspender if...

You don't have a debt repayment strategy. If your credit card balances are growing and you haven't considered how you'll pay them off, or if you're making minimum payments only and continue to rack up debt, you may be an overspender.

You're dipping into your emergency fund for non-emergency purchases. Most experts advise saving enough to cover six months of expenses for emergency situations, like unexpected medical bills or home repairs. But if you're spending that money on discretionary purchases, like frequent shopping sprees, it might be time to reassess.

You may be an oversaver if...

You feel really attached to your money, so much that you don't want to let it go. Some people have separation anxiety when it comes to money. While it’s smart to scrutinize every purchase, it might be a problem if you feel overly attached to your cash. "If you live in fear of never having enough and you don't spend money on the things you can enjoy, oversaving can contribute to unhappiness," Alford says. 

You feel guilty treating yourself. If you deny yourself small delights—like dinner at a restaurant or new shoes—it could be a sign you’re allowing fear of lack of money to cloud out life’s simple joys.

You’re terrified of financial catastrophe. “[If] you live in fear of needing all the money you saved due to some unforeseen event, you could be an oversaver,” Alford adds.

"If you live in fear of never having enough and you don't spend money on the things you can enjoy, oversaving can contribute to unhappiness." — Catherine Alford

How to strike the right balance

Just like you can be addicted to saving money, you can also be addicted to socking it away. And both of those habits have a compulsive component that can become unhealthy when it interferes with everyday living. After all, as Alford says: "Life is about balance, and that's true for your finances, too."

As you reassess your post-pandemic finances, Alford suggests creating a budget, whether you're an oversaver, overspender, or a little bit of both. Why? Because a budget can help you strike the right balance between your needs and wants. Free resources like Upwise and financial wellness programs offered through employers can help with that. Here are three other steps to follow:

1. Understand underlying drivers

If oversaving and overspending are a compulsive ritual for you, consider ways to stop it: Work to recognize the triggers that lead up to buying or saving too much, and work toward preempting the behavior in the future. (This is called habit reversal training).

You may want to consider working with specialists, such as a financial planner and therapist, to help set appropriate boundaries.

2. Give yourself permission to save and spend

Once you finalize your budget, practice it daily to help good habits stick. Importantly, make sure you add in small categories for extras to establish a framework for your money.

“Setting aside fun money in your budget every month gives you permission to spend,” Alford says. “If you have a general savings account, you'll never want to pull from it to go on a vacation or buy a new outfit. But, if you have a specific budget category for fun money, you can enjoy it freely. This can help you continue to save while also enjoying life's little extras along the way.”

3. Embrace your feelings

“It's important to recognize how emotional money is,” Alford adds. “We often think of it as pure math with income and expenses. But there's often a lot of backstory regarding why we do what we do with money. If you feel like you've always had a hard time with money, take some time to be introspective. Get to the root, emotionally, of why it's hard, and let that guide you on a path to find better balance between spending and saving in the future.”

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