Money has long been a taboo subject, something that many of us seem to think is an automatic conversational no no. It’s probably not that polite to go around asking everyone how much they earn, how much debt they have and what their assets are – however, there’s no doubt that it is also useful information to have. For example, we recently blogged about how Kanye West – who is now worth millions – once had to borrow to keep the wolf from the door. That kind of information is interesting because it reminds us that we’re all actually very similar, that debt can be a stepping stone and all of us have the potential to reach our financial goals. So, it’s very interesting when the BBC One series, Britain’s Spending Secrets, comes along a shines a bright light on how we spend our cash.
Emotions and spending
Britain’s Spending Secrets was hosted by Points of View presenter Anne Robinson and was relentlessly investigative into the spending habits of both the mind-blowingly rich and those with barely two pennies to rub together. What was interesting about the programme was the way that most of us make spending decisions that are often based more on emotion rather than logic. In the programme, we saw helicopter commutes and mansions, as well as people living in the woods with nothing. There were interesting contrasts – the self-made millionaire with the flash cars and houses who refused to send his kids to a fee-paying school, for example. And the hippies searching supermarket bins for their dinner. Where were they finding their next meal from? Not Tesco or Lidl, but Waitrose. The programme shone a light on how so many of our spending decisions have an emotional motivation – but what are our blind spots?
Adverts – advertising is, of course, designed specifically to get us to spend money and unfortunately it’s very good at that. Next time you’re watching TV look out for the number of emotional triggers that each advert contains, whether it’s trying to get you to donate to charity or convincing you that a certain soft drink will help you find a life partner. Adverts can be a blind spot for even the most sceptical – all it takes is that one Christmas ad or exciting celebrity endorsement and all caution is thrown to the wind.
Image – for many of us, wanting to improve our images and the way that others respond to us is a huge emotional shopping trigger. We will spend thousands of pounds on clothing we believe is flattering or on products we think will make us look younger/thinner/wealthier/generally more attractive. Even in times of recession we still spend out on beauty products (the UK beauty industry is one of the only sectors to have grown during the recent tough economic period) and most of us can find any number of reasons to justify a new look.
Pets – we just love our animals and we’re willing to spend big on them. Whether this comes from a sense of responsibility or a desire to spoil them to cement loyalty, most of us will spend vast amounts on pet care and pet food without a second thought (a case in point was two hippies who appeared in Britain’s Spending Secrets who would scavenge their own food from bins but insisted on buying the best fresh food for their dog).
Fear – anxiety and fear are great motivators and particularly so when it comes to making purchases. It may be a fear of missing out on a great bargain or it could be anxiety about the consequence of not owning something that we have invented to justify a purchase. Insurance is, of course, the most obvious purchase that we make out of a sense of fear (or, some would say, practicality) and a fear trigger often leads us to make more expensive, better quality buys.
Impulse – impulse spending is probably the most reckless of all and encompasses a whole wide range of emotional responses. You may decide that you ‘deserve a treat’ and that justifies a new purchase. Or you might have had a bad day and be shopping to cheer yourself up. You might be gloriously in love and temporarily immune to the constraints of your monthly budget or perhaps you’ve just been through a restrictive situation and you just think want to do something without considering the consequences.
Money matters are personal to us as individuals but there are some common themes, no matter where you sit on the pay scale. We all have our own emotional triggers and getting to know them can help establish better financial habits – and keep spending under control.
Alex Hartley is a keen advocate of improving personal finance skills. She's worked at Solution Loans since 2014 and written hundreds of articles about how people can manage their money better. Her interest in personal finance goes way back to...Read more about Alex Hartley