“Do not save what is left after spending, but spend what is left after saving”.
When it comes to our relationship with money, emotions often play a bigger role than we realize. Whether we’re making purchases out of impulse, fear, or a need for validation, our emotional state can have a big impact on our financial decisions. In fact, research has shown that when we’re feeling stressed, anxious, or overwhelmed, we’re more likely to make impulsive spending decisions. On the other hand, when we’re feeling secure, confident, and optimistic, we’re more likely to make rational, well-thought-out decisions. Understanding the psychology of spending and spending
One of the most common emotional triggers for overspending is stress. When we’re feeling overwhelmed or anxious, we may turn to retail therapy as a way to cope. Spending money can give us a temporary sense of relief, but it can also lead to feelings of guilt and regret. Another common emotional trigger is fear. When we’re afraid of missing out on a deal or running out of money, we may make impulsive, impulse-driven decisions. It’s important to be aware of these emotional triggers and how they can affect our financial choices.
Social media and advertising play a significant role in influencing our spending habits. Seeing images of people with the latest gadgets, cars, or vacation destinations can make us feel like we need to keep up with the Joneses. And when we see ads that say things like “limited time only” or “buy now, pay later,” our fear of missing out can cause us to make decisions that aren’t in our best financial interest. These types of messages can create a sense of urgency and pressure.
The sunk cost fallacy is the idea that we continue to invest time, money, or energy into something even when it’s no longer serving us, simply because we’ve already invested so much. This fallacy can lead us to continue making purchases even when we know they’re not a good use of our money. For example, we may buy a gym membership and keep paying for it even though we’re not using it, simply because we’ve already paid for it.
Financial literacy is one of the most important tools we have for taking control of our financial future. When we understand concepts like budgeting, saving, and investing, we’re able to make more informed decisions about how we spend and save our money. And when we understand how things like interest rates, taxes, and inflation work, we can make more effective financial choices. It’s never too late to learn more about money management, and there are plenty of resources available to help.
A 43-year-old Makgabo Letoalo says that he blew his RAF payment in 2022 that was over R4000000.00 and was left with nothing to show, including his Rivian R1T that was beyond repair after he was involved in an accident after a rough night at groove where he had spent over R3000.00 with his girlfriend. ” I was left traumatised and depressed. My girlfriend left me for someone else. I wish someone had guided me and taught me about spending, saving and investing”. Said Makgabo
Education is a powerful tool that can help us change our lives for the better. By learning new things and expanding our horizons, we can open up new opportunities and discover new passions. No matter our age or background, it’s never too late to invest in our education and reach for our goals. Let’s remember that learning and growth are lifelong processes, and education is a gift that keeps on giving.