Speaker 1: Welcome to How Do They Afford That? The podcast that
Speaker 1: peaks into the financial lives of everyday Australians. Are Michael Thompson.
Speaker 1: I'm a writer and the co host of the podcast
Speaker 1: Fear and Greed. Business News has always ie with Canna Campbell,
Speaker 1: financial planner, founder of Sugar Mama TV, the financial literacy
Speaker 1: platform covering YouTube and podcast, books, Instagram, threads, TikTok, keynote,
Speaker 1: speeches and more. Hello Canna, good morning.
Speaker 2: I'm quite excited because I love talking about money, but
Speaker 2: today we're talking about spending money and the emotions behind it.
Speaker 2: So I feel like today's episode is going through resonate
Speaker 2: with a lot of people, but also make people feel safe.
Speaker 1: You make it sound very woo woo right from the start.
Speaker 1: It's all about emotions. It's all about feelings.
Speaker 2: Well, money is emotional, so why not.
Speaker 1: Okay, Well, today's topic. Actually, you are right, because today's
Speaker 1: topic is all about spending, and more specifically, it is
Speaker 1: about overspending people who can't quite stop themselves from spending.
Speaker 1: We're going to look at kind of why happens, what
Speaker 1: it looks like, and most importantly, how to gain some
Speaker 1: control again over your money and a lot of this
Speaker 1: is emotional, isn't it like it is? It has a
Speaker 1: root cause that is often quite an emotional one.
Speaker 2: And everyone has something.
Speaker 1: I think are there varying degrees of overspending because I
Speaker 1: imagine there's people who kind of can't resist, like buying
Speaker 1: a milky way as they're doing the grocery shopping, and
Speaker 1: then there's probably those who have got multiple credit cards
Speaker 1: all maxed out and no way of paying them off,
Speaker 1: and they are kind of two opposite ends of the spectrum.
Speaker 2: Yes, of course there are, and I think it's really
Speaker 2: important we go back to the basics and actually define
Speaker 2: this properly upfront, so we don't even get people parent
Speaker 2: or misdiagnosing themselves. So if someone isn't an overspender, it
Speaker 2: means they're spending more than what they actually have or
Speaker 2: what they earn. And I have to say this overspending
Speaker 2: does not discriminate. So this can be for all sexes,
Speaker 2: all different financial situations, all different levels of education as well.
Speaker 2: So you know, thinking that it's only women and it's
Speaker 2: only young women is completely incorrect and essentially it is
Speaker 2: a squandalous lifestyle.
Speaker 1: What's the worst you've ever said I'm assuming that you
Speaker 1: would have seen this throughout your career. You would have
Speaker 1: kind of maybe seen this, might not have been a client,
Speaker 1: might have just been someone that you have known something.
Speaker 1: Have you seen this?
Speaker 2: Here's the funny thing. I'm a financial planner, So as
Speaker 2: soon as someone hears that, everything's hidden, because I think
Speaker 2: people assume I'm going to judge them, which is not
Speaker 2: the case at all.
Speaker 1: No, you say your judgment here for the studio.
Speaker 2: For me exactly exactly. So I feel like people try
Speaker 2: to hide things from me if they are an overspender.
Speaker 2: So I haven't personally seen too much directly. However, of
Speaker 2: course people will come to me and share stories or
Speaker 2: concerns about their loved ones spending in a certain way.
Speaker 2: So in the first person, no, I have not seen,
Speaker 2: but have I heard? In the second person, third person,
Speaker 2: I guess it is yes, I have. So at the
Speaker 2: end of the day, I don't judge and everyone, as
Speaker 2: I say, everyone has that thing, whether it be sugar,
Speaker 2: whether it be screens, whether it be alcohol. You know everyone,
Speaker 2: it's it's just another challenge that we you know, people
Speaker 2: have and that they grab onto. But I think it's
Speaker 2: important that we understand the signs of overspending, you know,
Speaker 2: to help someone realize okay, well actually I might be
Speaker 2: an overspender and may need to get help. And the
Speaker 2: you know, the classic things I would say is, you know,
Speaker 2: as you mentioned, the credit card debts, so credit card
Speaker 2: debt or multiple credit card debts, or different loans to
Speaker 2: different institutions, and you know, not having a budget at all,
Speaker 2: having no savings at all, definitely not having any emergency money.
Speaker 2: And you know, I think obviously the consequence of that
Speaker 2: is in obviously having a low credits score and you know,
Speaker 2: not really having any goals to work on. You know,
Speaker 2: ideally financial goals seem to be lacking. But the number
Speaker 2: one physical sign is I would say, being surrounded by stuff. Yeah,
Speaker 2: stuff that that person has purchased or you've purchased. You know,
Speaker 2: you can see the clutter, the shopping bags, the you know,
Speaker 2: items hanging up with tags still, you know, the boxes
Speaker 2: of you know, all the electronic gadgets and things stashed
Speaker 2: at the back of the closet. That's the signs that
Speaker 2: you know that I'm talking about that. Okay, all right,
Speaker 2: there is potentially something to explore and do some work on.
Speaker 1: Are are there particular triggers for this. Is there an
Speaker 1: element of look. Our podcast is called how do they
Speaker 1: Afford That? Which is kind of like a It's quite voyeuristic,
Speaker 1: isn't it. It is about kind of looking at what
Speaker 1: other people have and wondering how they do it. Is
Speaker 1: there an element of trying to keep up with other people?
Speaker 1: Perhaps that's that's in Overspendings are whole range of different things.
Speaker 2: There is a whole range. But obviously at the end
Speaker 2: of the day, like when we purchase something, we do
Speaker 2: get a dopamin hit, and there's peer pressure, there is
Speaker 2: the lifestyle creep, there is you know, obviously the end
Speaker 2: of the impulsive buying. I was talking to someone who
Speaker 2: works one of those online shopping networks and she said
Speaker 2: that there are customers that just continuously buy NonStop every
Speaker 2: single day. And then there's obviously social media, and you know,
Speaker 2: I also think debt is a tree or a catalyst
Speaker 2: for overspending, because when someone is in debt and say
Speaker 2: they're in debt by say fifteen thousand dollars, think and
Speaker 2: they see say a new pair of sneakers, Well, I'm
Speaker 2: already in debt. What's another two hundred and fifty dollars
Speaker 2: more worth of debt. And that's why I sort of
Speaker 2: say it becomes quite toxic and it can spiral even
Speaker 2: further out of control. So yeah, i'd say this a
Speaker 2: variety of different sort of situations where you'll see these
Speaker 2: sort of triggers you could call it.
Speaker 1: And I imagine there would be the psychological and we're
Speaker 1: not qualified to talk about these kinds of things, but
Speaker 1: there would be things like stress, yeah, and that there
Speaker 1: would also be something that would probably encourage it.
Speaker 2: One of the situations where someone told me of their
Speaker 2: lord one overspending and it was actually boredom.
Speaker 1: Really, yeah, just nothing to do, so just to spend money,
Speaker 1: it must be it must be an awful feeling then
Speaker 1: to kind of just know that that you are not
Speaker 1: getting anywhere financially because you just cannot resist this urge
Speaker 1: to spend. Yeah, and to see those credit card bills
Speaker 1: coming in and to see the loan statements coming through
Speaker 1: and not be making any headway. And I suppose there
Speaker 1: would be an element of putting your head in.
Speaker 2: The sand, definitely, and then that triggers anxiety and stress
Speaker 2: and sleepless nights. And this was why I said it
Speaker 2: can just spiral. But you know, this is another form
Speaker 2: of addiction and it needs to be taken very very seriously,
Speaker 2: just like alcohol or drug abuse or gambling.
Speaker 1: And so the long term consequences you mentioned before at
Speaker 1: credit score. Did you mention that or did I just
Speaker 1: imagine that?
Speaker 2: No, I said lower credit Scoore, Wow, you were listening.
Speaker 1: I was listening, but clearly kind of not processing because
Speaker 1: I wasn't one hundred percent sure if you had said it.
Speaker 1: Not so long term consequences. If you have got kind
Speaker 1: of multiple credit cards, and if you've got multiple kind
Speaker 1: of personal loans that you are using to fund your spending,
Speaker 1: that is going to have an impact on your credit score.
Speaker 2: Absolutely, that may impact you further down the track. One
Speaker 2: day when you want to go and buy a property
Speaker 2: in the bank say well, sorry, you know you don't qualify.
Speaker 2: You have to wait a couple of years until you
Speaker 2: fix your credit score, or you have to buy borrow
Speaker 2: a much higher interest rate.
Speaker 1: And the banks when you are applying for a loan,
Speaker 1: a home loan as well, look quite closely at your spending.
Speaker 2: Very closely, and as we know from having Adam on
Speaker 2: the show, they want to see a budget, they want
Speaker 2: to see your transactions, where do you spend your money,
Speaker 2: And it's.
Speaker 1: Going to be very hard to hide this. Yeah, this
Speaker 1: kind of this level of overspending from and this isn't
Speaker 1: even then talking about your credit score. This is just
Speaker 1: about those questions that the bank is going to ask
Speaker 1: you whether or not they're deciding to give you.
Speaker 2: A loan exactly. And also there's the financial consequence, but
Speaker 2: also then there's your mental health and your physical health.
Speaker 2: And you know it's not just borrowing money. If you
Speaker 2: have been an overspender, it quite often aligns with someone
Speaker 2: who ends up with no money in investments or barely any,
Speaker 2: not much money put aside into superannuation, not much in
Speaker 2: emergency money, and just living this life filled with worry
Speaker 2: about the future.
Speaker 1: Well, I think we've succeeded in making everything sound thoroughly depressing.
Speaker 1: It feels as though we've gone through all of the
Speaker 1: downsides here.
Speaker 2: God, you're so negative. No, this is an opportunity to grow,
Speaker 2: to heal, to rise above.
Speaker 1: This is my point. I'm saying, we've got all the
Speaker 1: bad stuff out early. We are going to take a
Speaker 1: little break, just a very quick break, and then we
Speaker 1: are going to come back and we are going to say,
Speaker 1: what do you do about it?
Speaker 2: All right, great, I like these productive conversations.
Speaker 1: You went off way too early then in assuming that
Speaker 1: I was being a negative nelly.
Speaker 2: All right, I'll wear that.
Speaker 1: Okay, excellent quick break. And then we fixed the problem. Cana.
Speaker 1: We are talking today all about overspending, and we've talked
Speaker 1: about what it looks like, the warning signs, the triggers,
Speaker 1: the long term consequences of a chronic overspending problem. Let's
Speaker 1: now look at how to deal with it, because there's
Speaker 1: no point going through the problem if we don't try
Speaker 1: and come up with some kind of a solution. I
Speaker 1: have read, and I don't know whether this is necessarily
Speaker 1: the case, I've read that tracking your expenses and your
Speaker 1: spending is a good step because it kind of just
Speaker 1: increases your own visibility and your own understanding of what
Speaker 1: you're spending and where you're spending it.
Speaker 2: You're forced look at the cold hard truth. So I
Speaker 2: would recommend and I'm actually someone who doesn't recommend tracking
Speaker 2: your spending when it comes to budgeting, because I think
Speaker 2: it's it does take up a lot of time. But
Speaker 2: in the one situation where you have someone that's drowning
Speaker 2: and dead and overspending. Yes, and this isn't just once
Speaker 2: a week, this is every day. You should be going
Speaker 2: through your transactions looking at where you are spending money
Speaker 2: and how much is And it is quite a sobering
Speaker 2: activity because you realize how quickly those little expenses the
Speaker 2: coffee here, the T shirt that you bought here, and
Speaker 2: you dress there, really does add up by the end
Speaker 2: of the week or the end of the month, or
Speaker 2: the pay cycle. And that's that moment where the penny
Speaker 2: drops that you need to go, okay, all right, this
Speaker 2: is actually a waste of money. I need to do
Speaker 2: something about it. So I definitely recommend in that situation
Speaker 2: tracking your spending and also switching off the cards. No
Speaker 2: credit cards, use a debit card, or even better, switch
Speaker 2: to cash if that is convenient for you, because seeing
Speaker 2: that exchange of you know, one hundred dollars note or
Speaker 2: a figal note will make you so much more aware
Speaker 2: as to the exchange of values but also what you value.
Speaker 2: And it actually hurts to hand money over.
Speaker 1: That kind of tracking of spending. That could be the
Speaker 1: first time that somebody actually realizes, isn't it just how
Speaker 1: much they are overspending and it could actually be really
Speaker 1: quite a confronting moment, couldn't it.
Speaker 2: It is it is, and but better to discover that
Speaker 2: earlier rather than later. And whether there's more debt or
Speaker 2: more valuable time lost and opportunities lost.
Speaker 1: Okay, so we are tracking expenses and spending, we are
Speaker 1: moving away from credit cards, looking it Shush down, and
Speaker 1: I'll come back to credit cards in a second. We
Speaker 1: are switching either to a debit card or to or cash.
Speaker 1: What about then setting financial goals? Does this help to
Speaker 1: change the mindset?
Speaker 2: Definitely? And you know, whilst you get a dopamine hit
Speaker 2: from buying something, you also get a dopamine hit and
Speaker 2: I think a bigger dopamine hit from achieving a goal.
Speaker 2: So in these situations, if we're going to we're dealing
Speaker 2: with someone who's an overspender, they're looking they're getting lots
Speaker 2: of dopamine hits all the time with every single expense.
Speaker 2: So we need to almost recreate that environment for them
Speaker 2: and have lots of short, small, little financial goals to
Speaker 2: work towards, even if it's only saving up one hundred dollars,
Speaker 2: even if it's only you know, paying fifty dollars off
Speaker 2: your debt, lots of those little things that you can
Speaker 2: actually feel good about yourself and you're still getting that
Speaker 2: sort of high, if you want to call it. And
Speaker 2: it also helps rebuild your sense of faith and confidence
Speaker 2: again and makes you feel like, Okay, all right, things
Speaker 2: are different and I'm kind of getting back on track.
Speaker 2: And that's a really attractive feeling to have if you
Speaker 2: are trying to rebuild or turn your life around.
Speaker 1: Yeah, and it keeps you something really positive to focus on,
Speaker 1: doesn't it Like it's just it is we talked about
Speaker 1: all the negativity around this, and this is something really
Speaker 1: really positive longer term kind of dopamine kind of hit
Speaker 1: credit cards just to close off credit cards.
Speaker 2: Entirely by now pay later.
Speaker 1: Oh yeah, yeah, that's a good point including that in
Speaker 1: this How should somebody with a spending problem approach credit
Speaker 1: cards and approach by now pay later? Is this? Is
Speaker 1: it just a it is a no go, no go entirely.
Speaker 1: Just cut it out, cut it out.
Speaker 2: This is the problem. You know, You've got to go
Speaker 2: to the removed temptation. Okay, And but I mean I
Speaker 2: have no issues with buy now, pay later, and I
Speaker 2: have no issues with credit card when used in the
Speaker 2: right way, you know, for the right reasons. But you've
Speaker 2: this is causing or it's enabling that person to continuously overspent,
Speaker 2: has got to be removed. So removing those temptations at
Speaker 2: absolutely it is essential.
Speaker 1: Okay, all right? And that would be hard, wouldn't it,
Speaker 1: especially when every shop has kind of get you buy now,
Speaker 1: pay later here and use this, and it seems does
Speaker 1: seem very easy to get a credit card as well.
Speaker 1: There is an element of a very strong self discipline required.
Speaker 2: But come back to the goals. Remember we're replacing, you know,
Speaker 2: that hit with something that's bigger, better and better and healthier.
Speaker 1: Yeah, I like that. What about financial accountability? And I
Speaker 1: was reading about, like saying in alcoholics anonymous and those
Speaker 1: kinds of organizations where you actually have somebody that you
Speaker 1: are accountable to, a spouse or a friend or someone.
Speaker 1: Does that have value in this situation where they can
Speaker 1: essentially be the person that is helping to hold you
Speaker 1: to account as you are trying to give up what
Speaker 1: is essentially an addiction.
Speaker 2: Absolutely, And this is where I think having seeing a
Speaker 2: financial counselor it could be really valuable because you want
Speaker 2: someone that actually is going to go the distance with you. Yes,
Speaker 2: a friend may, you know, keep you in check for
Speaker 2: three months, but what if you've got three years worth
Speaker 2: of debt repayments to make and you know, and there's
Speaker 2: a lot of you want to reduce or remove the
Speaker 2: risk of a relapse in overspending. So I would probably suggest,
Speaker 2: if you're serious about this and it's a big problem,
Speaker 2: go to a financial counselor that can work with you
Speaker 2: on a long term basis and be there once a week,
Speaker 2: once a month to help you keep going, whereas a
Speaker 2: friend may not necessarily be as reliable and also may
Speaker 2: not necessarily have the right skill set as well, because
Speaker 2: you know you're putting a lot of faith in that person.
Speaker 2: But you know, the sooner you get onto this the better.
Speaker 2: And with any of the programs like the twelve step program,
Speaker 2: is the first thing is admitting to yourself this is
Speaker 2: not healthy. I don't feel good about myself, I'm not proud.
Speaker 2: Something needs to be done. You know that awareness is
Speaker 2: is this art of your journey, and then obviously doing
Speaker 2: that work on yourself. There are going to be uncomfortable moments.
Speaker 2: There are going to be feelings that you don't want
Speaker 2: to deal with But you have to if you want
Speaker 2: to make a long lasting change. And really that mindfulness
Speaker 2: and that you know, going to the root or the problem.
Speaker 2: It's that deep work, it's that dark work, but it's
Speaker 2: where the best type of rebirth can come from. And yes,
Speaker 2: I know I'm going off like kumbaya with you, but
Speaker 2: I do think you can heal from this, and you
Speaker 2: can learn how to spend money in a safe way
Speaker 2: and in a way that's skilled free. But you have
Speaker 2: to do the work, and you've got to pave a
Speaker 2: better way, a healthier way, a happier way for yourself.
Speaker 2: And if it means having support, take it and have
Speaker 2: proactive measures in place. And you never know, one day
Speaker 2: you actually might be able to help someone else who's
Speaker 2: gone down the path you've gone down.
Speaker 1: Is there a chance of going too far of kind
Speaker 1: of going back to far the other way and all
Speaker 1: of a sudden that you have another You've replaced one
Speaker 1: unhealthy relationship with money with another unhealthy relationship with money
Speaker 1: where you're no longer kind of willing to spend anything
Speaker 1: on anything at all. Is that I suppose where the
Speaker 1: having good financial goals then comes in, and it's about
Speaker 1: changing your overall relationship with money.
Speaker 2: Yeah, that actually happens quite a bit. People you know,
Speaker 2: become almost frugal and they just they cannot physically bring
Speaker 2: themselves to spending money. And again that's where you've got
Speaker 2: to do. Get some professional help so you can learn
Speaker 2: to forgive yourself. This is not about this is not
Speaker 2: about punishenting yourself. And yes, of course you want to
Speaker 2: try and undo the financial damage, but you're also trying
Speaker 2: to learn and grow and you know, show some sort
Speaker 2: of kindness and compassion and self love to yourself, because
Speaker 2: often sometimes that's really what when you get to the
Speaker 2: root of the problem, there is an element of self love.
Speaker 2: You're looking to give yourself self love to spending. So, yes,
Speaker 2: it does happen. But with the right type of help,
Speaker 2: you won't get to that point where you go to
Speaker 2: the other end of the spectrum, or you don't switch
Speaker 2: your overspending to another form of addiction.
Speaker 1: All right, I feel like we've covered this in some details.
Speaker 1: So the signs, the warning signs that things to look
Speaker 1: out for, those loans stacking up in the credit cards
Speaker 1: that are maxed out and no real means to kind
Speaker 1: of pay them off because you just keep on adding
Speaker 1: to them and being surrounded by stuff, stuff that you
Speaker 1: have bought because you just couldn't resist, essentially, and that
Speaker 1: there is a range of these triggers, whether it's kind
Speaker 1: of peer pressure or lifestyle creep, social media, or debt
Speaker 1: debt just kind of spiraling and snowballing and debt attracting
Speaker 1: more debt as you go, or stress, a whole bunch
Speaker 1: of things contributing to it, and that that is then
Speaker 1: one of those long term impacts as well, that that
Speaker 1: stress that is triggering over spending then causes more long
Speaker 1: term stress and it just keeps ongoing and builds up
Speaker 1: more anxiety and also has an impact on you financially.
Speaker 1: But as we discussed that, there are some straightforward steps
Speaker 1: to kind of fixing it that we are talking about
Speaker 1: things like tracking your expenses, tracking your spending just so
Speaker 1: that you've got that awareness, that you have got that
Speaker 1: visibility and that understanding of what you're actually doing, setting
Speaker 1: some financial goals, so replacing that really short term sugar
Speaker 1: hit that you get from spending with something long term
Speaker 1: that is going to make you feel good about yourself
Speaker 1: and about your money. It is about switching off the
Speaker 1: credit cards, getting rid of that, getting rid of buy now,
Speaker 1: pay later, changing perhaps to either a debit card or
Speaker 1: to cash, so there is actually some meaning and some
Speaker 1: feeling behind the payment when you make it, removing the
Speaker 1: temptation if you are someone who does have a tendency
Speaker 1: to overspend on credit cards and then get help if
Speaker 1: you need it as well, and whether that could be
Speaker 1: someone a friend or a spouse, someone who is able
Speaker 1: to help you along the way, but also acknowledging that
Speaker 1: in the end that is not their job. They are
Speaker 1: not someone who does this professional and does this every day,
Speaker 1: whereas a financial counselor is somebody who is able to
Speaker 1: do this and maybe the right person to help you
Speaker 1: every week from now until who knows, who knows how
Speaker 1: long it takes to kind of get past a challenge
Speaker 1: like this, because in the end, it is an addiction.
Speaker 1: I think.
Speaker 2: Is that in a nutshell, I'm really crowd of today's episode.
Speaker 1: Yeah, I feel like it's actually overspending is something that
Speaker 1: almost feels like it gets glorified a little bit. It's
Speaker 1: just like, oh, it's just to shop aholic kind of thing,
Speaker 1: which sounds all good and kind of have the glamorous
Speaker 1: images of kind of walking in the door with all
Speaker 1: of the shopping bags and everything. But in the end,
Speaker 1: it is a financial problem. It is a problem that
Speaker 1: can cause you significant issues with your own health and stress.
Speaker 1: And there are some easy steps to take, or manageable
Speaker 1: steps to take to get yourself out of that.
Speaker 2: Problem and to start the journey today.
Speaker 1: Yeah, absolutely all right. If people want more information from you, Kenna,
Speaker 1: where do they find.
Speaker 2: You at Sugar Mama TV on Instagram.
Speaker 1: And you can hear me every day with Sean Aylmer
Speaker 1: on Fear and Greed, Australia's best business podcast. Thank you
Speaker 1: very much for listening to how do They Afford that?
Speaker 1: Remembered hit follow on the podcast and the very best
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