A WORD FROM THE AUTHOR: Hi there! As the GameStop scenario winds down, here’s some topline news in the world of finance:
GameStop hit a stock price of 122.50 last Tuesday. This is a 288% decrease in price within a week. While Redditors remain adamant about fighting back, the reality of the share price says otherwise.
Robinhood CEO, Vladimir Tenev, is testifying before a House committee on 2/18
Silver increase in price this week and reached the highest levels since 2013
I’m not a financial advisor and recommend personal research before any investment for any money decision.
This Week’s Intention
Last week we took a look at GameStop and the wild side of finance. Since then, GameStop took a nosedive in stock price on Tuesday as the trading movement began to subside. This week, I want to take a step back and examine something more closer to home. The human brain is hardwired for spending money through dopamine hits when we feel good. We can’t help but feel proud when we make a large purchase.
We all want to save money but sometimes it can feel hopeless. Taking a look at how money impacts your brain will help you consider new ways to save money.
Your Spending Personality
Personal finance is 20% head knowledge and 80% behavior. - Dave Ramsey
Dave Ramsey’s daughter, Rachael Cruz, wrote a great blog post on the personality type of saving money. This isn’t your horoscope, enneagram, or Myer-Briggs personality type. This is something that takes recognizing and can change for better or worse. Rachel condenses the money influences into the following:
Spender vs. Saver
Nerds vs. Free Spirits
Safety vs. Status
Family and Child
With the four above criteria, where do you classify yourself? For me, I’m a natural saver, nerd, status seeker who grew up with conversations around money with my dad.
Begin with surrounding yourself with these honest conversations and recognize where you currently stand. Ask yourself if this aligns with your goals.
Dopamine and the Brain
The rush of spending money on an item with a hefty price tag is indescribable. Dopamine and adrenaline rush to the brain to give you a high.
Is it just me or does DoorDash taste better after a long day when you refuse to cook? I’ve found myself in this situation way too many times. I’ve justified myself in the past by saying, “Well I worked hard today! The least I can do is buy myself DoorDash!”
The Bureau of Labor and Statistics says ordering food can add up to $3,000 for the average American per year.
We all know buying groceries is cheaper. So why don’t we do it? We tell ourselves that we’re entitled to good food and nice things even if our salary doesn’t say the same. People go into debt to keep up with appearances.
Depending on how much of a rush you get, you can potentially experience buyer’s remorse when the high eventually fades. Even worse, your problems could lead to a gambling problem.
Here are some tricks to help control your brain.
Tips and Tricks for Controlling Your Spending
My tips come into three categories
Tracking Your Spending
Finding Substitutes
Does It Spark Joy?
Tracking Your Spending
Nobody likes tracking their spending. Like a school teacher sending a student to detention, we resent ourselves for looking at our purchase history.
This month, I encourage you to track your spending as best you can. The first step is self-awareness when it comes to your spending habits.
For some people, it’s an Excel spreadsheet filled with countless rows and manually inputting each expense as it comes along. For others, it’s a mental tally of where you’re at and assessing what you’re spending on. The point here is to be more conscious about your spending.
Tip: Go through last month’s credit card or bank statement with a highlighter. Highlight any expense that makes you unhappy and then come up with a way to tackle it for next time.
Finding Substitutes
One of the easiest ways to tackle a bad spending habit is to find substitutes. With the purchases you highlighted, think of ways you can work around it.
One of my most recent substitutes is my local grocery store selection. Two months ago, my mom introduced me to Aldi’s. Now, I’ve always heard that Aldi’s had low prices but the local H-E-B had everything I needed. After making the switch to Aldi’s, I’ve cut my monthly grocery bill in half and I’m eating healthier as a result.
My main takeaway is those brand name items aren’t as crucial as you think they are. Become an informed shopper with every single purchasing decision. For each purchase, ask yourself, “Who’s the competitor and what can they offer me?” You’ll be amazed at how transformative this self-reflection can be.
Does It Spark Joy?
There’s no doubt that buying a luxury item can briefly make you feel good. This portion is all about Marie Kondo’ing your shopping list. Does it spark joy?
The process of assessing how you feel about the things you own, identifying those that have fulfilled their purpose, expressing your gratitude, and bidding them farewell, is really about examining your inner self, a rite of passage to a new life. - Marie Kondo
I used to order food nearly every day. Out of laziness or lack of cooking skills, I opened delivery apps constantly.
One day, I sat with myself and asked why I did that. Sure, I enjoyed the food, but the takeout had me feeling full for about 30 minutes. Were 30 minutes of feeling good worth nearly $20? Sometimes yes, but most of the time it’s not.
Personal finance advisor, Ramit Sethi, advises you to cut spending on routine items and spend big on expenses you love. For example, cut your car insurance, rent, and grocery bill to travel to the Cayman items. Go big or go home.
If your monthly expenses cause you more pain than joy, seek alternatives from competitors and make the jump. Sometimes the hardest part is trying something new. What have you got to lose?
I hope you enjoyed this week’s article. Have a great week.
-Jordan