When I was in my 20’s I spent a lot. Some I was aware of; some was unconscious. Either way, one day I had to admit to myself I was over $40,000 in debt. It occurred to me that’s kind of how addiction works. Addicts often don’t realize there’s a problem until they are in way over their heads. I started wondering, is spending money an addiction?
I was living the dream with a beautiful family, dream vacations, a custom-designed home, a luxury car, and all of the trappings to go with it. On the outside, I had it all together and I was what everyone wanted me to be. Then I hit rock-bottom. Our car was repossessed, we owed more on our house than it was worth, and I was using my near-the-limit credit cards to figure out how to buy diapers and groceries each week.
It’s true, addiction is most often associated with things like substance use or gambling, but it can even extend to things like food, exercise, or spending money. Pardon the pun, but it’s a sobering place to be.
It’s said that 6% of the people in the US have a spending addiction. That’s almost 20 million people! While it’s common in our culture to “keep up with the Joneses,” and joke about a shop-till-you-drop mindset, the reality is the foundation of our economy fuels the idea of overspending with easy access to credit cards, marketing at every turn, and a consumer-driven economy. It’s socially acceptable to be a compulsive spender, and often, it seems to be encouraged.
Addiction is a cycle. It’s usually triggered by some type of event that brings up negative emotional feelings. Maybe these are associated with stress, not feeling good enough, or unhappiness. So it triggers a craving or an urge to distract yourself from the pain and make yourself feel better. You begin a ritual that leads to use. What follows are often feelings of guilt, remorse, shame, embarrassment, and stress. These negative emotions trigger the cycle to repeat which can make it hard to break.
Addiction can affect everything in a person’s life like relationships, employment, or safety. Don’t forget, your children are always watching and learning from what you do, too.
If you’re wondering if spending money is an addiction for you, ask yourself if you
Compulsive spending can be caused by a number of things, but often it begins with trying to avoid negative feelings. These can be emotions of loneliness, depression, stress, or feeling out of control. Humans are hard-wired to avoid pain and discomfort for our survival. When we aren’t taught as children healthy methods for coping with negative feelings, we look for easy solutions to distract ourselves and numb out to what’s going wrong inside.
Compulsive shopping may be motivated by finding the perfect item, giving the appearance of a flashy lifestyle, or shoppers who love to score a deal and spend to save money.
Once you fill that goal, the brain releases chemicals like endorphins and dopamine – these are the feel-good chemicals. These are sometimes called the “happy hormones.” They are released automatically when we do things that make us feel good – exercise, laughter, and a feeling of accomplishment. Either way, our minds, and bodies react positively when our systems are flooded with these neurotransmitters, and so we do more of what we can to get them.
I’ve made an argument for how compulsive spending can fall into the category of addiction, however, it’s not officially recognized as a behavioral addiction by the DSM-5.
Some research shows compulsive spending can align closely with things like impulse control, obsessive-compulsive disorder, or bipolar disorder. Others maintain it sometimes co-occurs with disorders like depression, anxiety, or substance use (which impairs judgment).
Don’t misunderstand, I am not saying you do or don’t have a diagnosis – that’s not the purpose of this article. If you have concerns, please speak to a qualified professional who is trained to make treatment recommendations that are best for you and your situation.
The good news is, just like there is a psychology to the addiction cycle of spending, there is also a psychology to breaking that habit. I am proof that it is possible to stop the cycle of money-spending addiction and live a happy, debt-free life.
In my book, The Recovering Spender, I go into more details about how my family and I sat down and really discussed our priorities. What truly mattered to us? Was it the high-end car, the designer clothes, the latest electronics, or bringing the biggest gifts to the birthday parties? Or was it something else? You probably already know the answer.
I encourage you and your family to create a list of your values and the things that you want to accomplish together. Chances are, your list will include things like making memories, helping your children with college or their first home, or retiring early so you can enjoy your golden years with your grandkids.
From there, you can start to reverse-engineer your way out of the spending cycle. Set goals around the things you desire – starting an emergency fund, paying off credit card debt, saving for college, planning for retirement.
1. Get honest with yourself (and your family)
This was one of the hardest steps for me, but it was so necessary. I am very independent, and I was also the one in charge of our finances. So I was responsible for knowing what was in the accounts, how many cards there were, when we became overdrawn, and where I was shuffling money to hide it. This meant I had no accountability when it came to money.
It’s so important to get a clear vision of your finances and know exactly what your expenses are, what your debts are, and what your income is.
2. Set a Budget
Once you know where you stand, you can create a budget. There is no hard-and-fast rule around this, and Google will tell you there are as many ways to create a budget as there are recipes for chicken. Basically, you want to make sure your expenses don’t exceed your income each month. Include a plan for emergencies and for debt pay off, too.
I love using a financial planner and cash envelopes to keep me on track. This was especially useful when I first stopped using my credit cards because it allowed me to be conscious of exactly what I spent and what was left.
3. Give Yourself Play Money Each Month
Allow yourself some money to be spontaneous each month. If you’ve ever tried to diet and radically cut out all sugar and fried foods, you know it lasts a short time before you are binging on cupcakes after the kids go to bed (not that I’ve ever done that, but I’ve heard stories. . . ).
Schedule some activities that are alternatives to impulse shopping, but also expect that a little unplanned spending with the cash you have allotted will happen too.
4. Find Support
When I started my journey to financial health, I didn’t have a lot of resources. Since we started by asking, “Is Spending Money an Addiction?” it makes sense that we treat the road back to financial health the same as we would recovery.
A support group like Debtors Anonymous that may meet locally or virtually and focuses on the 12-steps of recovery can be life-changing. You may also choose to join a program like my Crush Your Debt course which includes an interactive, supportive community with the same goals you share. Or, you may seek the help of a doctor or mental health professional.