In our continuing saga of ‘Crazy Consumption’, we have been focusing on real-life stories of this phenomenon which afflicts consumers who spend without control, sometimes to their financial ruin. The silly spending season is fast approaching, and we hope that our readers’ experiences will help you to resist the Christmas urge to splurge.

This week we examine Richard’s experience in the spending cycle. He has a problem many of us wouldn’t mind dealing with – too much money to spend!

Richard’s Story:

Your article on crazy consumption really hit the mark for me. I’m twenty-seven years old and I’m tired of wasting my money. I live at home with my parents, which helps to keep my expenses down. I do save a portion of my salary, but I realize that most months I will spend J$20-J$30,000 on idle activities and things I don’t even need. Sometimes I splurge on big ticket items, other times I buy a lot of small things that add up. Once I have money in my hand – I have to spend it!

I will be on leave from work during the Christmas period, so I’ll have a lot of free time on my hands. I’m afraid that I’m going to waste my bonus on parties and unnecessary stuff, like I normally do. My major frustration is that I seem to have absolutely no self-discipline to stop spending this way. Please help me to regain control over my money!

The Bigger Picture

Richard and I talked about his experiences with money from childhood days and in his adult life. He revealed that he had a humble upbringing – he never wanted for the necessities, but he also knew that his family didn’t have a lot to spend on frivolous things. He admitted that sometimes he would feel frustrated because there was never a surplus to buy the things he really wanted.

Richard recalled a childhood friend who he envied because he always seemed to have excess money. He later found out that the reason his friend could buy nice things was because he saved some of his lunch money and had summer jobs and other forms of income. Richard decided that when he started earning money, he would have the freedom to buy anything he chose. He remembered getting his first summer job at 17, and how great he felt when his mother realized that he was able to buy his own things without asking her for money.

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One of the things that bothered Richard was that he felt aimless and idle when he spent money. He believed that he bought things without reason or purpose, and that he was just spending money for the sake of spending it. On the positive side, he had started some savvy investments and occasionally found opportunities to earn extra money. However, sometimes he dipped into his savings and used up his profits in unnecessary spending. Richard admitted that he didn’t currently have any concrete goals for his money, except that he hoped that by the time he was 30, he would not have to worry about money and not feel that he had to be tied to a job.
The Cure

Richard’s case is one that afflicts many young people who receive a new found sense of independence upon earning their own income. No more do they have to listen to their parents telling them how money should be spent – they have control over money for the first time in their lives. Ironically, this sense of control often leads to out-of-control spending.

People tend to spend aimlessly when they have no specific money goals. Money is just a medium to get things and enjoy life, and there is no connection between putting it away towards achieving financial goals such as a house, further education, or retirement. It’s only later in life that they regret wasting so much money and wish they had spent more wisely.

Richard clarified his financial wish to state that he wanted to have investments that were earning enough consistently to replace his 9-5 salary. He didn’t want to stop working, just to have the financial freedom of choice. I showed him that with his excess income and lack of liabilities or dependents, he had a great chance to succeed at this goal if he was focused on it.

He committed to:

1. Stick to a budget that limited the amount he could spend on entertainment and shopping
2. Put all excess funds into an ‘opportunity account’ at a financial institution where he had little access
3. Re-invest the profit made from his investments instead of spending it
4. Plan towards acquiring income generating investments such as a rental property

Richard revealed that he loves a challenge, and he’s looking forward realizing his dream of being financially free at age 30.

If you have suffered from Crazy Consumption in the past, and are worried about its financial impact on your life, please email your story to info@financiallyfreenetwork.com. You could receive a personalized treatment plan which may help to solve your problem.

* Name changed upon request