This article is meant for those of you who took my single most important investment advice “Invest in yourself” and interpreted it as a carte-blanche to spend the money on beauty procedures and shopping sprees. Those Gucci belts, Chanel glasses, and Prada bags are not going to buy themselves. And to the male part of my audience which is currently laughing gleefully, I want to remind that Hermès ties, Rolex watches, and state-of-the-art-barely-out-of-the-factory-brand-new gadgets also count as incriminating evidence. The Jury is back, and the Judge is ready to announce the verdict, “The defendant is guilty of being a shopaholic.”
There is nothing wrong with buying those things per se and if you can afford them. The problem starts when we follow the mottos “Shop now, budget later” and “Why put off until tomorrow what you can impulse buy today?” As much as I love my fellow sister shopaholic Becky Bloomwood, her approach to budgeting is probably not the best.
Before we go any further I want to talk about why we are so drawn to shop, tend to overspend, get in debt, are scared to look at our bank account and credit card statements, and don’t even mention to us that big bad B-word (budgeting, and not what you thought). This is a topic on the crossroads of behavioural finance, personal finance, psychology, and mental health, all of them my favourites. And even if shopping doesn’t turn into a full-on addiction (yes, a mental health disorder, an addiction known by various names: shopaholism, compulsive shopping, compulsive buying disorder, oniomania), why do we do it? Why do we sabotage ourselves, our financial goals and future well-being? It’s quite insightful to review those more extreme cases when “just shopping” becomes an addiction, to understand what moves us.
We can quote here Tyler Durden from The Fight Club by Chuck Palahniuk “We buy things we don't need with money we don't have to impress people we don't like.” It is that simple, or is it? Before we start budgeting, we should all ask ourselves some hard questions. Why are we buying things? Is it the peer pressure and social expectations that drive us? Is it just simple carelessness of a “buy now, worry later” approach? Are we looking for some endorphins that we think we cannot find anywhere else? Or are we fighting the losing battle with “feelings of depression, anxiety, loneliness, or low-self esteem,” as Dr. Banschick suggests in his article “The Shopaholic” in Psychology Today?
These questions are important because they lead to self-awareness. Once we ask them, think about them, really look for and find the answers, we will know what to do about them. This will help us to take a deep breath, download our recent financial transactions, or open our current bank account and credit card statements and start working on understanding our spending habits and creating a tentative budget. Understanding WHY we do the things we do, WHY we spend the money the way we spend, WHAT our financial goals are, and WHY we want to achieve them is paramount to our financial journey. Without understanding ourselves and our final destination, we cannot move any further because, as the saying goes, “If you don’t know where you are going, you are going to end up somewhere else.”
I know these things are hard. We often tend to think that something is only our problem, that nobody else will understand because they don’t know us, they don’t know how it is. And we are wrong. Financial advisors do not just exist to make rich people richer and help high net worth and ultra high net worth clients manage their money. I’ve recently had some people tell me, “Well, what do you even know about helping regular, not wealthy people? Go back to managing the millions for your clients. You don’t understand simple people’s concerns.” Yes, they did say this, and they were supposed to be my “friends”. We can definitely help wealthy people manage their money more effectively and meet their financial goals. Let me tell you, for a professional, it’s easier to manage the money for a high net worth client because there are fewer constraints than for somebody with fewer funds or none at all.
However, it doesn’t change the fact that financial planning and helping clients starts with understanding their current situation, their goals, their needs, and then continues to budgeting. And I strongly feel that no matter how much money we have, we will significantly benefit from budgeting and spending it wisely. And it’s the people who have less that need this kind of help the most.
By saying this, I don’t mean that you have to find a financial advisor because you will not be able to manage your finances on your own. Maybe you will, and maybe you won’t. This is where your self-awareness comes into play. This is all about you and what you think is right in your own financial situation. If you think you can do it on your own, go for it. Read my articles, read other people’s advice. If you believe that you need more help or a more personalized approach, go to your bank and don’t hesitate to ask for it.
However, if you think that your financial advisor at your bank or writing articles here will not understand you, think again. And if you don’t trust the one you have, find the one you can trust. Like doctors, lawyers, and tax accountants, we’ve seen it all. I’ve seen the clients who had millions of dollars in a single investment account, and I’ve seen clients so deep in debt that despite their valuable real estate properties and investment assets, their liabilities were so high, that they were quite literally on the verge of bankruptcy. We are also people. We understand your struggle. We’ve been there. I’ve been there. We will understand.
I want to finish this with some of my favourite quotes about shopaholics. They are funny, and I hope they will make you smile today.
And a couple of quotes from “Confessions of a Shopaholic”.