I’m Stressed About Money — But I Can’t Stop Spending It

Dear Paco,

I just graduated college and I’m a lot more aware of my money than before — but since the pandemic started, I’ve been spending more of it. I’ve never had any conflict about money with anyone else, as I’m very independent, but I have internal conflicts where I feel really bad if I spend my money on something expensive. I’m well aware of rising prices, so I’m trying to save more, but still, opening packages gives me serotonin. It’s way easier to online shop and I tend to buy things that make me happy, yet I still feel guilty every time.

I have a good job, so I feel like I shouldn’t be so stressed about money… but I am. I’m worried about my savings because I don’t want to work for the rest of my life. I’m only 22, so I have many years until 65, when I’d like to retire. I think about money constantly, and I just really want to get to a place where I don’t need to worry about my situation.

Dear stressed about spending,

Feeling better about your money and your spending is as simple as taking a more mindful approach to your relationship with it. Being mindful doesn’t mean you have to keep a meticulous budget, but it does require you to be open to making adjustments in your behavior to break old patterns and habits. 

There are some general benchmarks you can use to assess whether other parts of your financial life are being impacted by your spending — for example, if you’re saving less than 5% of your income, your credit card debt never seems to shrink, and you’re constantly stressed about cash. But there’s always a chance that these are symptoms of a larger issue, like income, so it’s best to take a close look at your recent spending to know exactly whether or not you’re shopping too much.

Once you have the data, you’ll use that information to craft a flexible spending plan that balances your future financial goals and current desires. Let’s start there.

Review your spending over the last three months (or more, if you’re feeling ambitious). There are various tools you can use to look back at past spending habits. I like Tiller HQ because I like that it uses Google Sheets, but I know not everyone is fluent with spreadsheets. Most banks have built-in technology to review spending, but it’s usually not the greatest or most accurate tool, especially if you use a checking account and credit card at two different institutions. Much, Copilot, Personal Capital, and Mint are all budgeting apps that can help you see how much you’ve spent in the past three months.

To simplify things, group all your expenses into the following three main categories: bills and life; fun and BS; and future and goals. Figure out how much you've been spending each month in each category. Some of these costs will be fixed, like rent. For other costs, you can calculate an average monthly cost over the last three months. Alternatively, you can take a maximalist approach and base your monthly spending on the largest amount you spent over the last three months.

Say you spent $400 on restaurants in September, $312 in August, and $367 in July. The average spend is $359 because $400 + $312 + $367 / 3 months = $359. You could allocate the average ($359) or the most you spent ($400).

Numbers on their own can seem meaningless, so you’ll want to look at how much you’ve been spending relative to your other expenses, relative to how much you’ve been saving and investing, and relative to your income.

The 50/30/20 rule is a general benchmark for determining whether or not you’re spending too much. According to this rule, 50% of your spending should be for your necessities in the bills and life category, like rent, food, transportation, health care, utilities, and student loan payments. 30% of your spending is allocated to your wants in the fun and BS category. This is non-essential spending, like online shopping, but it’s fun, which makes it feel like life. Lastly, the remaining 20% would go towards your savings and investments for your future and goals. 

Now that you know your target, take some time to reflect on what you’ve discovered. How do the numbers make you feel? Where would you like to make realistic adjustments to how you’ve been spending your money? These changes will be the starting point for your spending plan.

Your spending plan will use the three broad categories mentioned above. Here’s how it’ll work: You’ll open up a “bills and life” checking account. You’ll fund it with money from each paycheck and pay for all your essential expenses from this account. You’ll prioritize savings and/or investing by putting a portion of each paycheck into a savings and/or investment account. You’ll also open up a “fun and BS” checking account that you’ll fund with the portion of your paycheck that you’ve allocated for non-essential spending. Think about your paychecks being split into three different spending categories each month. 

You’ll have to consider when your bills are due and make adjustments so that timing of payments is in sync with your paychecks and how you’re splitting them up.

When you split up your spending, you’re prioritizing investing, saving, and essential expenses. This is like eating your vegetables first: It’s a way to front-load what’s good for you in the long run. And it can make your fun and BS spending less guilt-inducing since you’ve already taken care of your future.

By allocating a portion of your income to fun and BS spending and keeping those funds in a separate account, you’re creating an internal process for managing this category of expenses. In a sense, you are creating artificial scarcity to protect yourself from yourself. This is a way to impose a limit on how much you’ll spend each month.

One way to break a pattern of behavior is to quit that behavior cold turkey for a short, fixed period. Consider a 30-day cleanse where you refrain from online shopping. (Feel free to adjust the time frame based on what feels right for you.) Whenever you feel the urge to buy something online, examine what triggered you. Was it Instagram, a promotional sales email, procrastination, or all of the above? Consider ways to limit your exposure to these triggers or ways to react to them that don’t involve online shopping. 

The ability to buy things online is obnoxiously easy. We can purchase items with a single click. Our phones can scan our credit cards and even automatically populate the numbers with uncanny immediacy. 

I enjoy the luxury of convenience in a lot of areas of my life, but it makes me wonder: Just because we can, does it mean we should be able to buy things so damn easily? Corporations clearly think so. I don’t. Creating some friction that makes parting with your hard-earned dollars a little more difficult isn’t such a bad thing.

A buy list is exactly what it sounds like. It’s a list you make of the things you want to buy, but don’t necessarily need. Keeping the list is a way to get the dopamine rush of researching and anticipating the purchase. For example, you’re scrolling through Instagram, and since the algorithm knows you better than yourself, you get served an ad for a pair of shoes that you really want but don’t need. Add the shoes to your buy list and wait. 

You can spend time researching the thing you want to buy, and go in on the details. Spend time making your buy list handsome and tend to it. All of this will feel like you’re making progress toward getting the thing you desire, which will give you that dopamine rush without having to make the purchase.

Lastly, make a rule for how long you’ll keep something on your list before you’ll buy it. 24 hours is a good minimum, but longer works too. When enough time has passed, you can revisit your buy list to evaluate whether you really want to make a purchase or if you were just sauntering on the hedonic treadmill.

Sometimes feeling better comes after we take — or refrain from — certain actions. For example, many folks tend to feel better after they exercise or take a walk, regardless of how they feel about the act leading up to it. Changing your spending behavior might be enough to make your bad feelings about spending go away. If that’s the case, great! However, if you're still feeling guilty about spending despite your changes, there might be some deeper-rooted issues to explore.

Spend some time reflecting on your feelings about spending. Where exactly does your guilt come from? Explore early stories and observations about your upbringing and how this has colored your story about spending. Are you behaving in a way that is outside of what is expected of you from your family or loved ones? 

After college, when I finally told my parents the truth about my credit card debt, I was filled with guilt because I subconsciously believed that I was acting outside of their expectations of me. They expected me to be responsible, meaning there were parameters for how a responsible person ought to behave. Imagine a horse fence: The fence defined what was expected of a responsible person, and getting myself into credit card debt was me going beyond those parameters.

Even though I’ve gone from being broke in my 20s to thriving in my 30s, I’ll still have moments where I’m lying in bed and think about that expensive thing I bought two days ago and convince myself in the span of one breath how one purchase is the beginning of my financial ruin. It’s irrational, I know, but what I think is happening is an old pattern playing on repeat. It clearly shows that I’m still linking my sense of safety and security with money. In those moments, I usually take a deep breath and tell myself, “I’m safe.” It’s ridiculously simple, silly, and surprisingly effective, and most importantly, I’m grateful that the statement is pretty much always a fact.

It’s OK to buy things for yourself, especially if you’re being responsible with your money by investing and saving for the future. But having alternative ways to flood your brain with feel-good chemicals gives you access to other tools that can change how you’re feeling at any moment. I think it’s empowering to have ways to self-regulate that don’t depend on spending money.

Try to notice what other activities make you feel the way online shopping does. Don’t discount them because they’re free or simple. If they impact your financial life positively, they’re actually quite valuable.

Your favorite finance friend,

Paco (she/her)