Have you ever charged something and justified the expense because you knew your next paycheck would cover it?
Me too! I knew I wasn’t the only one.
Have you ever not paid off the charge when the bill came because something else came up, or you forgot, or you thought it’ll get paid off eventually, or, heck, you just didn’t feel like it?
And it’s a big reason I’m in so much stinkin’ debt.
At the time I charge the purchase, I feel totally guilt-free because I know the money is coming. It’s just, like, right around the corner. I can smell it.
And it’s not that much anyway, right? What’s $100 in the grand scheme of things? Yes, yes, I’ll pay it off when I get paid.
But then, well. I don’t.
This has been one of my biggest financial mistakes in my entire adult life. Convincing myself that I’ll pay it off out of my next commission, or tomorrow’s tips, or next week’s paycheck.
It has nothing to do with making a practical decision. It has everything to do with my greedy, impatient, tricksy emotions.
Because spending money is an emotional experience – and you can either use your emotions to help you or to hurt you.
What Is Emotional Spending?
Most people consider emotional spending to mean buying unnecessary purchases when you feel stressed out, or perhaps bored or underappreciated, or even when you’re happy.
Basically, your emotions are driving the ship and determining how much money to throw overboard.
We all do it, some more than others, because we believe that buying a new pair of shoes or adding a teal purse to our already bountiful collection is going to fill some little void and make our lives a teensy weensy bit more complete.
Actually, that’s total garbage.
When we make financial decisions based on our emotions, we’re spending the money because we want to feel good.
And this isn’t even a bad thing – as long as you’ve got the extra moolah to cover it. (“Extra” meaning all of your bills are paid, your debt is paid off, you’ve got some healthy savings in the bank, yada, yada, yada.)
Whenever I’ve bought something I a) don’t need, b) really want, and c) haven’t saved for, then I’m essentially letting my emotions be in charge and blowing off all the lovely wisdom that’s in my brain.
So, basically, I act like a toddler. But unlike the outcome for most unruly two-year-olds, the consequences of spending money I don’t have can literally affect my whole life.
My debt piles up, my savings go down, and my choices in life become limited.
All because I wanted something now.
So, if you’re nodding your head and saying yep, yep, mmhmm, this girl’s got my number, then you might be wondering how you can use your emotions to actually help you instead of them always trying to sabotage your efforts.
Well, I’ll tell you.
Pay with Cash.
If you just followed that advice alone without adding anything to it, your emotional spending would be reduced significantly.
But, just for fun’s sake, let me go into some reasons why paying cash will change how you spend your money.
Paying With Cash Is Painful
This is something I’ve learned from personal experience.
There is an emotional reaction whenever we spend money on something. However, it’s different depending on how we pay for that something.
When we use a credit card, there is no physical exchange. We swipe our card and then a stranger hands us a bag filled with stuff we want. The emotion we feel is *happiness* because we feel like we’re being rewarded.
And if our purchase is on sale? Woohoo! How can I NOT buy it? Why, that would be irresponsible! Yes, yes, buying it *right now* is the responsible thing to do…
This, my friend, is called the “shopper’s high”, and it’s tough to combat if all you’ve got to defend yourself with is a flimsy credit card.
Now, consider the alternative: paying with cash.
This IS a physical exchange. You put your hard earned dollars into someone else’s hands, and they give you your precious in return.
You feel the money leaving your grasp, you see the money being put in a locked register, then you don’t see yo money no mo’.
It’s gone. Fo-evah.
This is also an emotional experience. It’s called pain.
It’s much more difficult to part with cash than it is to swipe a card. And it’s the space between our pockets and the purchase that we decide if the pain of parting with our hard earned money is worth the pleasure of having more stuff.
Paying with cash is painful, but it keeps us from making stupid, emotionally charged decisions.
Here are some other benefits of shelling out the dough instead of swiping the card:
- you’ll avoid debt
- you’ll spend less frivolously
- you’ll have more leverage when negotiating a deal
- you’ll lose weight (it’s true! you’ll skip the appetizers, desserts, and alcohol to lower your bill)
- you’ll master the art of delayed gratification
- you’ll feel more in control of your finances
- you’ll value your purchases more
- you’ll keep track of your spending better
- you won’t be counting on future income
There’s probably at least 20 more solid reasons you’re better off paying with cash, but I’ll let you come up with those on your own. The point is, the long-term effects of paying with cash aren’t sequential – they’re exponential.
Move at the speed of cash
It’s taken me decades to draw my boundary line around today.
What cash do I have available to me today? Not tomorrow or next week or next month. Today.
If it’s not there today, then I just have to wait until it is there.
Like Dave Ramsey says, decide to move at the speed of cash.
Whether you pay with cash or charge up your credit cards, pain and pleasure will always both be part of the experience.
You can either endure the pain of giving away the bucks but then take pleasure in what you now own.
Or you can take great delight in buying something you don’t really have the money for but then later experience the discomfort of paying it off with interest.
From now on, I’m letting the pleasure of buying something new be the consequence of enduring the pain to pay for it, instead of the other way around.