Do you ever wonder about the psychology......

clint_S

The psychology is really interesting around getting people with no money to spend money they don't have.


It boils down to pain against reward. For example if you pay with Cash you feel that you are spending money so have a bigger pain hit and a lower reward, whilst paying with Credit Card has a low pain hit and an instant reward. The fact that most people don't get any pain hit when paying with credit as it isn't associated with instant loss of wealth, i.e. has not cost value mentally.


If you want someone to buy/pay more then you get them to use credit, credit card, buy now pay later, loans, etc. If you need to keep to a budget only use cash.

rockm87

Have been reading this thread on MMM. read it from the beginning. It's incredible how often it happens.

http://forum.mrmoneymustache.com/antimustachian-wall-of-shame-and-comedy/me-being-judgemental-and-a-family-friends-story/100/

kaya

My wife worked in finance for a while and the more income people have the more they think they are entitled to and the more debt they are in, I would have assumed that a couple on £150-200k a year wouldn't have huge debts but their debts are usually massive

tallyhoh

my partners is definitely a sense of entitlement, he believes he should have things because he just wants them. I actually remember his throwing a wobbly because someone he has "borrowed" money off wanted it back, he was furious - that's a real problem.

andyfromotley

I think it can be the combination of a whole host of things, for me

lack of financial education/good role models
entitlement
low self esteem
ability to 'outearn' bad financial decisions
the success of big business in making living beyond ones means appear easy and normal

However the more informed one becomes the easier it is to avoid these. My finances and my attitude toward spending and debt have been transformed by hanging around here, mmm and listening to dave ramsey. Just sad i didn't learn these lessons 30 years ago as i would now be relatively rich!

ali-t

There is a train of thought that suggests that some people will never be rich because deep down (often repressed) they don't think they ever will or should be. As a result of this, no matter how much money they earn or win they won't save it or invest it well. Anything they do have will either be frittered away or badly invested so they never generate significant savings.

sourcrates

I know exactly how I got into debt, and that was because I am stupid with money, always have been, always will be.

I understand that I should save for things, and invest for the future, the theory is not a problem to me, it's the practice.

I have never been able to save a penny, ever, and I doubt I ever will, it's just the kinda guy I am.
My behaviour has moderated with time, I used to blow hundreds, sometimes thousands, nowadays I'll go out and blow £100, and feel guilty, so don't do it often.

I'm approaching 50 now, and still can't take money seriously, I see it as a means to an end, I guess I'm just a lost cause lol !!!

Harryspotter

This is a really interesting point. I guess there are many reasons. For me, I think the fact that I am really content and settled in my own person and life, makes me know what I value. Obviously this would be different things for different people, but for me I am happy to make cutbacks in grocery shopping, daily frittering, entertainment, beauty products etc but I am keeping my holidays. I do have debt but it is affordable so I have kept one extravagance. In the past, when my children were little, I detested my job, was exhausted and stressed. So i think i spent money to alleviate that somehow. Now i have a fairly good work/life balance, good marriage and my kids are old enough to sleep through the night, so I am content with my life. My opinion is that a lot of people spend to compensate for something. There are other things as well Im sure.

Also, I completely agree with Steph - it disgusts me the pdl companies advertising so heavily during daytime tv. Im sure there used to be time when such things as gambling, solicitors were banned from advertising. Cigarettes are, so why not these hideous companies?

cakeforbrains

For me, I think it was growing up in poverty, coupled with meeting my second husband who earned a lot of money. Up until I met Mr Cake I was just scraping by, but then along he came with his (to me) large pay packet and I (we) started spending like I thought people on that income should. I didn't realise that access to credit didn't mean we could afford that credit.

I've also always been poor at planning for long-term future. My parents lived hand-to-mouth so I always have done. Having money saved (even a few hundred pounds) feels alien and edgy to me (although I am getting used to it). Most of my life it's been a 'spend it now before you can't' situation.

Yeah, I definitely think that there is a certain psychology involved in people who get into debt or are bad with money. I also think there is a certain type of person who hoards money and I feel sad for them. For instance, we have a family member who earns a little more than the average wage, but has (maybe) £40-50k tucked away. He is heading into middle-age, has no marriage or children, lodges in a house with an old lady, and can't progress in his career. He doesn't seem to be using his money for anything, which makes me sad for him.

FBaby

I think there has been a shift in culture that values commercialism over investment. Our grand parents used to feel 'rich' if they could put money aside. As a society, we feel 'rich' if we have gadgets, newer car, beautifully furnished homes.

Unfortunately, it seems to now have affected kids even as young as those still in primary school. My kids school created a 'virtual' bank to teach kids about budgeting. As part of it, they did a survey and it showed that only 5% of year 6 knew what a mortgage was, and only about 10% understood the concept of insurance. I thought that was quite a shocking result.