Living with credit, Protecting yourself

Feel powerless over finances? You’re likely to overspend

Kelly Dilworth

People are more likely to spend impulsively if they don’t think they have much control over their financial destiny, new research finds – and my own recent experience lends support to this.

Conversely, people who are confident in their ability to achieve financial success are more likely to save for a brighter future, according to the recent study published in the Journal of Marketing Research.

When people “believe they have the power to change their financial circumstances, they’re more likely to save money and focus on long-term success, rather than the short-term pleasure of having the latest technology or products,” study co-author Sunyee Yoon said in a news release.

“Successful self-regulation hinges on how strongly people are committed to a long-term goal,” study co-authors Yoon and Hyeongmin Christian Kim wrote in the report.

The study reminded me of a conversation I had with author Linda Tirado in 2014. A former night cook at IHOP who struggled with poverty and financial uncertainty for years, Tirado said that even when she was nearly broke, she would still spend money on extras such as restaurant meals or other conveniences. To her, setting aside money for the future felt less useful than spending on things that could help her get through the day.

“People will say, ‘Why are you making these short-term financial decisions?’” said Tirado in a Q&A about her book, “Hand to Mouth: Living in Bootstrap America.” “And I say: ‘A lot of it is about keeping ourselves going.’

“It’s a question of what’s going to give you energy, what’s going to get you through today, because today’s exhausting.” Saving a little extra every week might have helped Tirado pare her debt, but it wasn’t going to help lift her out of poverty.

I can relate. My husband and I have been dealing with financial insecurity lately as he tries to navigate a career in which the number of hardworking, qualified applicants greatly exceeds the permanent jobs available.

As we inch closer to the end of his current university contract, I’ve found myself impulsively spending more on small comforts I don’t need. Because I’m only spending a relatively small amount, it hasn’t felt like a crisis. But it’s getting worse – to the point that it could make a real dent in our emergency savings if I don’t stop swiping my card or hitting “buy” online each time I come across an inexpensive item that’s appealing.

I figured I was overspending because I was trying to de-stress,  but I’ve also been using frequent bursts of shopping to exercise control over my life at a time when it feels especially uncertain.

When your future feels hazy and out of your hands, it can be tempting to bury your head in the sand and focus only on the present as I did.

That’s the wrong approach. You can’t control how your life will unfold, but you can reframe your perspective.

If, according to the study, you need to feel empowered in order to feel motivated to save more, then it’s a good idea to consider the actions you can take now to improve your long-term odds.

Taking action toward a goal – even if it’s a remote one – could be just the motivational boost you need to realize you have more control over your life. I’ll try this myself going forward as I try to overcome my impulse to overspend and will report back on how well I succeeded.

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