While it may not surprise you, one of the many financial challenges that young adults face is the desire for stuff. It’s also known as consumerism, which accurately describes this addiction because it describes the existence of young adults. They live to consume. Many young adults either buy things that they want regardless of the financial consequences or at the very least (like myself) have a wish list of things they want to buy when they have money. If we are honest with ourselves, we all like to have nice things – it’s just a matter of controlling our urges.
Despite creating a fun budget a few months back, my wife and I have been pretty diligent about only buying things that we need. Sure, some things were not necessary, but they greatly improved our lifestyle (like a dishwasher). While I don’t think young adults should go cold turkey with spending money on entertainment or stuff, there still is progress to be made. While I don’t have statistical information to prove that people struggle with buying too much stuff, the fact that thrift stores are thriving and more businesses that buy used goods from consumers are growing (like 62 days for example) suggests that my theory is correct.
Why Consumerism is a Problem
Before I get into how to fix this problem, I think it’s first important to identify WHY it’s a problem. In other words, why does any of this matter. As it turns out, there are several reasons why I think spending too much money on unnecessary items is a problem:
- It Can Keep You From Investing / Planning for Retirement: One of the biggest excuses that people use to avoid planning for retirement is that they are young and retirement is decades away. They fail to realize the positive benefits of saving money now. If you are spending money on unnecessary items just to make yourself feel better, you are stealing from your retirement savings.
- It Can Lead to Lots of Debt - Despite your good intentions to spend less than you earn, it can lead you to rack up a lot of consumer debt. Once in debt, the interest rate and monthly payments (in addition to your other bills) makes it difficult to dig yourself out of. It’s hard to believe what people are forced to do to get out of debt. Some people are forced to sell their jewelry or their gold for money as a way to dig themselves out. The best way to protect yourself is stop spending money on useless items.
- Consumerism can be Addicting - Buying the newest gadget or new clothes one time is not a big deal, but when you look at how it changes your lifestyle, you can begin to picture the huge implications for your finances. You aren’t just spending a few dollars here and there, but you are raising your future expenses exponentially. Buying unnecessary items when you are young can put you on a course for financial failure. Another way of describing the cyclical changes is a term known as lifestyle inflation. Don’t let it happen to you.
Spending that is not regulated or controlled is never a good thing. It not only affects your ability to pay your bills this month, but for many months to come. The first step to avoid or stop doing this is to understand the negative consequences.
How to Avoid Spending Too Much
There are many popularized ways to avoid spending too much, but very few actually work. I’ve heard stories of people freezing their credit cards or automatically transferring money from your paycheck into savings. While there are many tricks like these that may work for some, they fail to get at the root of the problem. These quick fixes fail to understand that people spend too much not because they didn’t know how to trick themselves, but because of other, deeper psychological issues.
Understand the WHY First
The first thing you need to do is identify the reason behind your spending. If you find yourself buying things despite knowing that it’s not a healthy thing, start to ask yourself (honestly, if possible) why you are doing it. Here are a few reasons why people spend too much money:
- Childhood Lessons - Some people spend too much money because that is what they grew up knowing. Their parents taught them that any amount of debt is okay and having nice things is more important than being able to pay for it all.
- Boredom - Many people spend too much money because they are bored. They have too much time on their hands. Instead of doing something productive like exercising, hanging out with friends, or helping others, they buy a bigger TV and cable to keep themselves occupied.
- Unhappiness - Another common reason is search for happiness. Many people are dissatisfied with their jobs, so when they get home they feel the need to buy something. Getting new, nice stuff is a nice feeling and whether they realize it or not, by purchasing a few things on Amazon, they have forgotten all about their employment blues.
While I could go on and on, the only way that you are going to reconcile your spending habits is to first understand the negative consequences and that it is a problem worth fixing. Then, try to figure out why you are doing what you are doing. It’s not just because you don’t know better. Once you figure that out, the third step is to resolve the reason for your spending habits. It most likely won’t be a quick fix, but resolving it will bring balance to your life financially and emotionally.
Have you every made significant changes to your spending habits? How did you change them?