Liam Croke: the five triggers that lead to overspending

I was speaking with a friend of mine over the weekend and he was telling me about his child’s upcoming Holy Communion. They are going to have some friends and family over to the house after the mass and he and his wife have been preparing for the occasion for a number of weeks.

I was speaking with a friend of mine over the weekend and he was telling me about his child’s upcoming Holy Communion. They are going to have some friends and family over to the house after the mass and he and his wife have been preparing for the occasion for a number of weeks.

“Are you having many over?” I asked

“One hundred and fifteen,” came the reply.

If your jaw just dropped then welcome to the club. I couldn’t believe it; 115 people to a Holy Communion. I had fewer at my wedding.

“That must be costing you a fortune!” I said and he nodded his head in agreement. All in all they were going to spend about €7,500, from having the house redecorated, a couple of new plasma TVs (to impress the guests of course), food, drink and entertainment.

As nice as these people are, and they are, they have fallen prey I believe to two things, one of which is conscious i.e. “Keeping up with and being better than the Joneses”. The second thing is unconscious –what consumer behaviour experts refer to as a “spending trigger”, which is an emotional state that makes people more vulnerable to parting with their money.

I have identified what I believe are the five things that are triggers to people spending more than they have and the first is what my friend is doing next weekend – entertaining.

There is nothing like someone coming over to your house for whatever reason that makes some people spend more than they need to.

I remember speaking with a client of mine last year who admitted to spending over €500 on a new barbecue (the one he had was fine) because his in-laws were coming over and he wanted to impress them with this brand new, huge barbecue.

I almost forgot to mention that he also bought a new gazebo and a cast-iron chiminea (an outdoor fireplace to you and me).

So, whether it is having people over to celebrate a communion or just for a couple of hamburgers, the need to impress people can take many forms.

But spending more than you need to, or worse still getting into debt, is code red; don’t go there. People won’t think any less of you if your barbecue is a few years old or, God forbid, you don’t have four 50-inch plasma TVs in each room of your house.

Science, by the way, has an explanation – or maybe it is an excuse – why some people “want” things all the time. It is because we are driven by a chemical in our brain called dopamine which means that when we get something we want, we get a hit or a buzz which apparently is as powerful as cocaine.

Anyway, the second reason we spend more than we need to is, “because I deserve to”.

The rationale for some behind this is they “work all the hours God sends” so as a reward they deserve something for all their hard work. Sound familiar?

In moderation there is nothing wrong with the odd splurge. In fact I encourage many of clients to do this from time to time, especially if they achieve a certain goal like reaching a savings target, paying off credit card debt etc.

The problem comes when you constantly reward yourself and your budget goes out the window at the end of every month.

So, let’s assume you do work an 80-hour week. Does buying a new item of clothing really make you feel better? What would make you feel happier? Getting home earlier each night? Getting an extra hour sleep?

Speaking of sleep, it is the best way to prevent you from overspending.

There’s psychological research that found that after 48 hours of putting off buying something, the dopamine chemical I just referred to wears off.

What about that other chestnut on which we sometimes spend more than we should – holidays or weekends away.

If only we had the weather they have in Spain sure there’d no reason to go abroad. We have all said this at one stage and we are just trying to make ourselves feel better and justify the amount we are going to spend or borrow for our two week vacation.

For me a holiday abroad is something I look forward to every year and myself and Roseann set ourselves a budget for flights, accommodation and so on, not long after we return home.

We set about planning for next year’s getaway shortly after we return – we do this because it is important for us to have experiences with our kids while they still want to go away with us.

However, if we couldn’t afford to go and the only way we could was if we had to borrow money then absolutely we wouldn’t – no matter how much we think we deserved a break.

So, the key here is set yourself a goal to go abroad each year – or better still stay in Ireland. Know how much you want to spend and stick to it.

You don’t want to come home with lovely pictures of the sun setting over a magnificent mountain range ... alongside that other picture of a mountain of debt!

The fourth reason we spend more than we should is down to whether we are looking for love or not.

There is no doubt that people who are dating spend more. Whether you are male or female there is that temptation to spend on things like getting your hair done, new clothes, a new bottle of fragrance etc.

While it may make us feel better and more confident the person you are going on a date with may not know that the dress or shirt you are wearing isn’t brand new.

Have a look at your closet; you don’t need a new outfit for every date and according to many relationship experts, first impressions come down to not what you are wearing, but what you convey.

Fnally, we are vulnerable to overspending on things that promise to make us look younger, thinner and prettier. New cosmetic products, slimming pills or joining the gym, for example, to get in shape rather than going for a free run outside in the fresh air are all areas we definitely overspend. Of course with a new gym, we need new clothes, another expense!

I am not suggesting we should never not spend – of course we should, we are only human. However we just need to be that little bit more aware of what those triggers that lead to overspending are – because if you do you won’t have as many financial regrets as others most certainly do.