How Do They Afford That?If you have trouble keeping your spending under control, then this episode is for you. Join Canna Campbell - a financial planner for almost 20 years - and Fear & Greed's Michael Thompson as they look at ways to manage (and prevent) overspending.
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Canna Campbell is a Corporate Authorised Representative and Corporate Credit Representative of Wealthstream Financial Group Pty Ltd ABN 35 152 803 113 Australian Financial Services Licensee AFSL 412079.
Welcome to How Do They Afford That? The podcast that peaks into the financial lives of everyday Australians. Are Michael Thompson. I'm a writer and the co host of the podcast Fear and Greed. Business News has always ie with Canna Campbell, financial planner, founder of Sugar Mama TV, the financial literacy platform covering YouTube and podcast, books, Instagram, threads, TikTok, keynote, speeches and more. Hello Canna, good morning.
I'm quite excited because I love talking about money, but today we're talking about spending money and the emotions behind it. So I feel like today's episode is going through resonate with a lot of people, but also make people feel safe.
You make it sound very woo woo right from the start. It's all about emotions. It's all about feelings.
Well, money is emotional, so why not.
Okay, Well, today's topic. Actually, you are right, because today's topic is all about spending, and more specifically, it is about overspending people who can't quite stop themselves from spending. We're going to look at kind of why happens, what it looks like, and most importantly, how to gain some control again over your money and a lot of this is emotional, isn't it like it is? It has a root cause that is often quite an emotional one.
And everyone has something.
I think are there varying degrees of overspending because I imagine there's people who kind of can't resist, like buying a milky way as they're doing the grocery shopping, and then there's probably those who have got multiple credit cards all maxed out and no way of paying them off, and they are kind of two opposite ends of the spectrum.
Yes, of course there are, and I think it's really important we go back to the basics and actually define this properly upfront, so we don't even get people parent or misdiagnosing themselves. So if someone isn't an overspender, it means they're spending more than what they actually have or what they earn. And I have to say this overspending does not discriminate. So this can be for all sexes, all different financial situations, all different levels of education as well. So you know, thinking that it's only women and it's only young women is completely incorrect and essentially it is a squandalous lifestyle.
What's the worst you've ever said I'm assuming that you would have seen this throughout your career. You would have kind of maybe seen this, might not have been a client, might have just been someone that you have known something. Have you seen this?
Here's the funny thing. I'm a financial planner, So as soon as someone hears that, everything's hidden, because I think people assume I'm going to judge them, which is not the case at all.
No, you say your judgment here for the studio.
For me exactly exactly. So I feel like people try to hide things from me if they are an overspender. So I haven't personally seen too much directly. However, of course people will come to me and share stories or concerns about their loved ones spending in a certain way. So in the first person, no, I have not seen, but have I heard? In the second person, third person, I guess it is yes, I have. So at the end of the day, I don't judge and everyone, as I say, everyone has that thing, whether it be sugar, whether it be screens, whether it be alcohol. You know everyone, it's it's just another challenge that we you know, people have and that they grab onto. But I think it's important that we understand the signs of overspending, you know, to help someone realize okay, well actually I might be an overspender and may need to get help. And the you know, the classic things I would say is, you know, as you mentioned, the credit card debts, so credit card debt or multiple credit card debts, or different loans to different institutions, and you know, not having a budget at all, having no savings at all, definitely not having any emergency money. And you know, I think obviously the consequence of that is in obviously having a low credits score and you know, not really having any goals to work on. You know, ideally financial goals seem to be lacking. But the number one physical sign is I would say, being surrounded by stuff.
Yeah, stuff that.
That person has purchased or you've purchased. You know, you can see the clutter, the shopping bags, the you know, items hanging up with tags still, you know, the boxes of you know, all the electronic gadgets and things stashed at the back of the closet. That's the signs that you know that I'm talking about that. Okay, all right, there is potentially something to explore and do some work on.
Are are there particular triggers for this. Is there an element of look. Our podcast is called how do they Afford That? Which is kind of like a It's quite voyeuristic, isn't it. It is about kind of looking at what other people have and wondering how they do it. Is there an element of trying to keep up with other people? Perhaps that's that's in Overspendings are whole range of different things.
There is a whole range. But obviously at the end of the day, like when we purchase something, we do get a dopamin hit, and there's peer pressure, there is the lifestyle creep, there is you know, obviously the end of the impulsive buying. I was talking to someone who works one of those online shopping networks and she said that there are customers that just continuously buy NonStop every single day. And then there's obviously social media, and you know, I also think debt is a tree or a catalyst for overspending, because when someone is in debt and say they're in debt by say fifteen thousand dollars, think and they see say a new pair of sneakers, Well, I'm already in debt. What's another two hundred and fifty dollars more worth of debt. And that's why I sort of say it becomes quite toxic and it can spiral even further out of control. So yeah, i'd say this a variety of different sort of situations where you'll see these sort of triggers you could call it.
And I imagine there would be the psychological and we're not qualified to talk about these kinds of things, but there would be things like stress, yeah, and that there would also be something that would probably encourage it.
One of the situations where someone told me of their lord one overspending and it was actually boredom.
Really, yeah, just nothing to do, so just to spend money, it must be it must be an awful feeling then to kind of just know that that you are not getting anywhere financially because you just cannot resist this urge to spend. Yeah, and to see those credit card bills coming in and to see the loan statements coming through and not be making any headway. And I suppose there would be an element of putting your head in.
The sand, definitely, and then that triggers anxiety and stress and sleepless nights. And this was why I said it can just spiral. But you know, this is another form of addiction and it needs to be taken very very seriously, just like alcohol or drug abuse or gambling.
And so the long term consequences you mentioned before at credit score. Did you mention that or did I just imagine that?
No, I said lower credit Scoore, Wow, you were listening.
I was listening, but clearly kind of not processing because I wasn't one hundred percent sure if you had said it. Not so long term consequences. If you have got kind of multiple credit cards, and if you've got multiple kind of personal loans that you are using to fund your spending, that is going to have an impact on your credit score.
Absolutely, that may impact you further down the track. One day when you want to go and buy a property in the bank say well, sorry, you know you don't qualify. You have to wait a couple of years until you fix your credit score, or you have to buy borrow a much higher interest rate.
And the banks when you are applying for a loan, a home loan as well, look quite closely at your spending.
Very closely, and as we know from having Adam on the show, they want to see a budget, they want to see your transactions, where do you spend your money, And it's.
Going to be very hard to hide this. Yeah, this kind of this level of overspending from and this isn't even then talking about your credit score. This is just about those questions that the bank is going to ask you whether or not they're deciding to give you.
A loan exactly. And also there's the financial consequence, but also then there's your mental health and your physical health. And you know it's not just borrowing money. If you have been an overspender, it quite often aligns with someone who ends up with no money in investments or barely any, not much money put aside into superannuation, not much in emergency money, and just living this life filled with worry about the future.
Well, I think we've succeeded in making everything sound thoroughly depressing. It feels as though we've gone through all of the downsides here.
God, you're so negative. No, this is an opportunity to grow, to heal, to rise above.
This is my point. I'm saying, we've got all the bad stuff out early. We are going to take a little break, just a very quick break, and then we are going to come back and we are going to say, what do you do about it?
All right, great, I like these productive conversations.
You went off way too early then in assuming that I was being a negative nelly.
All right, I'll wear that.
Okay, excellent quick break. And then we fixed the problem. Cana. We are talking today all about overspending, and we've talked about what it looks like, the warning signs, the triggers, the long term consequences of a chronic overspending problem. Let's now look at how to deal with it, because there's no point going through the problem if we don't try and come up with some kind of a solution. I have read, and I don't know whether this is necessarily the case, I've read that tracking your expenses and your spending is a good step because it kind of just increases your own visibility and your own understanding of what you're spending and where you're spending it.
You're forced look at the cold hard truth. So I would recommend and I'm actually someone who doesn't recommend tracking your spending when it comes to budgeting, because I think it's it does take up a lot of time. But in the one situation where you have someone that's drowning and dead and overspending. Yes, and this isn't just once a week, this is every day. You should be going through your transactions looking at where you are spending money and how much is And it is quite a sobering activity because you realize how quickly those little expenses the coffee here, the T shirt that you bought here, and you dress there, really does add up by the end of the week or the end of the month, or the pay cycle. And that's that moment where the penny drops that you need to go, okay, all right, this is actually a waste of money. I need to do something about it. So I definitely recommend in that situation tracking your spending and also switching off the cards. No credit cards, use a debit card, or even better, switch to cash if that is convenient for you, because seeing that exchange of you know, one hundred dollars note or a figal note will make you so much more aware as to the exchange of values but also what you value. And it actually hurts to hand money over.
That kind of tracking of spending. That could be the first time that somebody actually realizes, isn't it just how much they are overspending and it could actually be really quite a confronting moment, couldn't it.
It is it is, and but better to discover that earlier rather than later. And whether there's more debt or more valuable time lost and opportunities lost.
Okay, So we are tracking expenses and spending, we are moving away from credit cards looking at shush down, and I'll come back to credit cards in a second. We are switching either to a debit card or to or cash. What about then setting financial goals? Does this help to change the mindset?
Definitely? And you know, whilst you get a dopamine hit from buying something, you also get a dopamine hit and I think a bigger dopamine hit from achieving a goal. So in these situations, if we're going to we're dealing with someone who's an overspender, they're looking they're getting lots of dopamine hits all the time with every single expense. So we need to almost recreate that environment for them and have lots of short, small, little financial goals to work towards, even if it's only saving up one hundred dollars, even if it's only you know, paying fifty dollars off your debt, lots of those little things that you can actually feel good about yourself and you're still getting that sort of high, if you want to call it. And it also helps rebuild your sense of faith and confidence again and makes you feel like, Okay, all right, things are different and I'm kind of getting back on track. And that's a really attractive feeling to have if you are trying to rebuild or turn your life around.
Yeah, and it keeps you something really positive to focus on, doesn't it Like it's just it is we talked about all the negativity around this, and this is something really really positive longer term kind of dopamine kind of hit credit cards just to close off credit cards entirely by now pay later. Oh yeah, yeah, that's a good point including that in this How should somebody with a spending problem approach credit cards and approach by now pay later? Is this? Is it just a it is a no go, no go entirely. Just cut it out, cut it out.
This is the problem. You know, You've got to go to the removed temptation. Okay, And but I mean I have no issues with buy now, pay later, and I have no issues with credit card when used in the right way, you know, for the right reasons. But you've this is causing or it's enabling that person to continuously overspent, has got to be removed. So removing those temptations at absolutely it is essential.
Okay, all right? And that would be hard, wouldn't it, especially when every shop has kind of get you buy now, pay later here and use this, and it seems does seem very easy to get a credit card as well. There is an element of a very strong self discipline required.
But come back to the goals. Remember we're replacing, you know, that hit with something that's bigger, better and better and healthier.
Yeah, I like that. What about financial accountability? And I was reading about, like saying in alcoholics anonymous and those kinds of organizations where you actually have somebody that you are accountable to, a spouse or a friend or someone. Does that have value in this situation where they can essentially be the person that is helping to hold you to account as you are trying to give up what is essentially an addiction.
Absolutely, And this is where I think having seeing a financial counselor it could be really valuable because you want someone that actually is going to go the distance with you. Yes, a friend may, you know, keep you in check for three months, but what if you've got three years worth of debt repayments to make and you know, and there's a lot of you want to reduce or remove the risk of a relapse in overspending. So I would probably suggest, if you're serious about this and it's a big problem, go to a financial counselor that can work with you on a long term basis and be there once a week, once a month to help you keep going, whereas a friend may not necessarily be as reliable and also may not necessarily have the right skill set as well, because you know you're putting a lot of faith in that person. But you know, the sooner you get onto this the better. And with any of the programs like the twelve step program, is the first thing is admitting to yourself this is not healthy. I don't feel good about myself, I'm not proud. Something needs to be done. You know that awareness is is this art of your journey, and then obviously doing that work on yourself. There are going to be uncomfortable moments. There are going to be feelings that you don't want to deal with But you have to if you want to make a long lasting change. And really that mindfulness and that you know, going to the root or the problem. It's that deep work, it's that dark work, but it's where the best type of rebirth can come from. And yes, I know I'm going off like kumbaya with you, but I do think you can heal from this, and you can learn how to spend money in a safe way and in a way that's skilled free. But you have to do the work, and you've got to pave a better way, a healthier way, a happier way for yourself. And if it means having support, take it and have proactive measures in place. And you never know, one day you actually might be able to help someone else who's gone down the path you've gone down.
Is there a chance of going too far of kind of going back to far the other way and all of a sudden that you have another You've replaced one unhealthy relationship with money with another unhealthy relationship with money where you're no longer kind of willing to spend anything on anything at all. Is that I suppose where the having good financial goals then comes in, and it's about changing your overall relationship with money.
Yeah, that actually happens quite a bit. People you know, become almost frugal and they just they cannot physically bring themselves to spending money. And again that's where you've got to do. Get some professional help so you can learn to forgive yourself. This is not about this is not about punishenting yourself. And yes, of course you want to try and undo the financial damage, but you're also trying to learn and grow and you know, show some sort of kindness and compassion and self love to yourself, because often sometimes that's really what when you get to the root of the problem, there is an element of self love. You're looking to give yourself self love to spending. So, yes, it does happen. But with the right type of help, you won't get to that point where you go to the other end of the spectrum, or you don't switch your overspending to another form of addiction.
All right, I feel like we've covered this in some detail. So the signs, the warning signs that things to look out for, those loans stacking up in the credit cards that are maxed out and no real means to kind of pay them off because you just keep on adding to them and being surrounded by stuff, stuff that you have bought because you just couldn't resist, essentially, and that there is a range of these triggers, whether it's kind of peer pressure or lifestyle creep, social media, or debt debt just kind of spiraling and snowballing and debt attracting more debt as you go, or stress, a whole bunch of things contributing to it, and that that is then one of those long term impacts as well, that that stress that is triggering over spending then causes more long term stress and it just keeps ongoing and builds up more anxiety and also has an impact on you financially. But as we discussed that, there are some straightforward steps to kind of fixing it that we are talking about things like tracking your expenses, tracking your spending just so that you've got that awareness, that you have got that visibility and that understanding of what you're actually doing, setting some financial goals, so replacing that really short term sugar hit that you get from spending with something long term that is going to make you feel good about yourself and about your money. It is about switching off the credit cards, getting rid of that, getting rid of buy now, pay later, changing perhaps to either a debit card or to cash, so there is actually some meaning and some feeling behind the payment when you make it, removing the temptation if you are someone who does have a tendency to overspend on credit cards and then get help if you need it as well, and whether that could be someone a friend or a spouse, someone who is able to help you along the way, but also acknowledging that in the end that is not their job. They are not someone who does this professional and does this every day, whereas a financial counselor is somebody who is able to do this and maybe the right person to help you every week from now until who knows, who knows how long it takes to kind of get past a challenge like this, because in the end, it is an addiction. I think.
Is that in a nutshell, I'm really crowd of today's episode.
Yeah, I feel like it's actually overspending is something that almost feels like it gets glorified a little bit. It's just like, oh, it's just to shop aholic kind of thing, which sounds all good and kind of have the glamorous images of kind of walking in the door with all of the shopping bags and everything. But in the end, it is a financial problem. It is a problem that can cause you significant issues with your own health and stress. And there are some easy steps to take, all manageable steps to take to get yourself out of that.
Problem and to start the journey today.
Yeah, absolutely all right. If people want more information from you, Kenna, where do they find you.
At Sugar Mama TV on Instagram.
And you can hear me every day with Sean Aylmer on Fear and Greed Australis best business podcast. Thank you very much for listening to how do they Afford that? Remembered hit follow on the podcast and the very best thing you can do is to tell somebody else or send them this episode and spread the word about how do they afford that? Thank you for your company. Join us again next week.
