The Vicious Psychology of Spending

In the movie Boiler Room, Ben Affleck’s character spouts out that “Whoever said money doesn’t buy happiness doesn’t [expletive] have any.” Maybe, maybe not. But more than we often admit, money and psychology are inseparably fused.

For most, the act of spending money brings temporary gratification. The key to responsible spending is to avoid becoming “addicted” to this feeling. I’m not suggested everybody with a bit of credit card debt is a compulsive shopper, but I think we have all caved in a little to this universal human weakness.

In theory, the act of buying something should be a balance between the pleasure we get from owning something new and the “pain” we feel from parting with our money. But in the electronic age, the feeling of parting with money is no longer immediate. When you pay with a credit, or even a debit, card, the realization of spent money doesn’t come until the end of the month.

That’s why it’s a good idea to record every transaction, even when paying with plastic. Keeping a running total of your purchases will remind you of how much you’re spending, and create mental obstacles for your impulses that may want to spend more than you should. Why?

Throughout college my motto was “financial ignorance is bliss.” I charged and charged and just ignored my credit card balances each month – as long as I had enough to make the minimum, I didn’t care. But as soon as I began to look at the mounting debts on those statements, it became harder to spend. When I was thinking about my debt, I could be cheap. The only problem was I could easily put it all out of my mind days later.

As I now work to permanently change my habits, I still find it hard to read every statement carefully – after all, it’s not a pretty picture. But the more keenly aware I am of my monthly budget and my long-term goals – every day – the easier it gets to spend less.

On the flip side, I have known people so frugal that every penny they spent hurt. I am pretty sure I will never get to that point, nor do I want to get there. After all, if you can not enjoy something, why buy it at all?

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.


  1. what date did you write this?

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