Most people are pretty terrible at handling their money. Humans do not have the tendency to spend only what they can and save the rest. Instead, people have to learn how to overcome their behavioural biases of spending to get what they want. There is research being done all the time on how humans have traits that make them behave in irrational and irresponsible ways. Knowing what behavioural biases you have can help you understand why you spend money the way you do so you can overcome your bad spending instincts.
Money Spending Behavioural Biases
You probably have too much on your mind. Cognitive overload means that you are not able to handle the constant bombardment of input that this world gives you and at times it can cause you to take the easy way out. When confronted with too many options it can be too easy to take the easiest possible solution and this can lead directly to unnecessary spending.
Not thinking about how you might feel in another situation can leave you open to frivolous spending. Having a gap in empathy such as not eating before you go to the grocery store can leave yourself open to being hungry when you are doing your week’s shopping and that can leave you with a trolley full of impulse buys.
You might be an optimist to the point of fault and be so overconfident that you do not plan for the worst. Not taking out insurance can be an example of not preparing for the worst and leaving yourself vulnerable to losing more money than you should.
Everyone likes instant gratification but if you do not have a hold on your desires than you can find yourself impulse shopping your savings away. If you automatically spend money on things that you do not need then those harmful habits can leave your wallet feeling light at the end of every month.
Humans are social creatures by nature and that can lead you to spending money just to hang out or even fit in. Resisting the urge to do the same as everyone else can be a good lesson in self-discipline that can be rewarding both personally and financially. Your money is yours and you should be spending it on you and not to impress others.
These behavioural biases are very strong and can take a lifetime of practice to overcome. Even if you can just focus on one behavioural bias at a time, your money will last much longer.