“When we parade, we are influenced.”
Certified Financial Counselor and Trauma Counselor Parween Mandar sees the impact of social media on people’s consumption behaviors. She has seen her clients compare themselves to family and friends and create a narrative about their lives.
“We hang out with other people, maybe go on trips or go to fancy dinner parties, and this comparison game is just starting to seep in,” Mander said.
She is quick to point out that on social media, “no one posts receipts.”
The material things you see on social media are often financed with debt, according to Mander.
They don’t see the financial difficulties that people face.
“We only see the beautiful, flashy things,” she said.
The endless onslaught of images can kick in when you have a debt problem. If you can, Mander recommends opting out of social media to avoid the problem. She also suggests following more positive influences.
“There are many personal finance developers out there,” she notes. Mander says you can start learning about personal finance by changing who you are and who you see yourself.
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The reason for the purchase
“There are layers of complexity underneath our spending decisions and we don’t talk about them enough.”
“It’s called bad with money because you spend too much and that’s the end of the conversation.”
One of the main problems faced by individuals is that it is often easier to find a quick fix than to identify the root cause of the problem. For many, this leads to impulse buying and “retail therapy”.
When you are stressed or tired, you can go online and buy a product that you have always wanted to feel better.
“What are we looking for here? Mander asks. “In most cases it’s comfort, safety, security.”
For Davies, understanding his relationship to money and the emotional weight it carried was one of the first steps in getting out of debt.
“I thought spending money showed I was successful, which was not healthy,” Davies said.
Keeping a diary of his expenses and using expense tracking tools helped Davies find a way out of debt.
Mander recommends creating a system to counter the temptation to buy on a whim. You can remove e-commerce apps from your phone and remove credit card information from places like the App Store and Amazon.
“Little things like this can also be enough to deter unnecessary spending in the first place.”
Look for signs
Davies experienced the debt spiral firsthand.
“At first, I didn’t even think I would have to pay off all the debts I had accumulated.”
“Once I hit the two credit card maximum and struggled to pay my minimum card balance each month, it was impossible to think about debt,” Davies said.
It can be difficult to spot the signs of a debt cycle. Mander identified three signs that could indicate you are having trouble:
They avoid looking at bank or credit card statements. Mander says this suggests you’re avoiding accountability and therefore don’t want to face the truth about your money.
You have a constant balance on your credit card and only pay the minimum amount each month.
You regularly pay off your credit card debt, but spend all your salary on it. Mander says it’s a silent sign of runaway debt because it’s a hidden cycle. For this reason, you cannot save money for the future.
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Societal pressure to spend
Mander recognizes that there’s a social element to spending, whether it’s an event with friends or a dinner and a drink. It can be hard to let go when trying to get out of debt, which is why she teaches her clients to “cut expenses.”
This technique involves finding a compromise that can limit your spending while still allowing you to attend a social event.
For example, if your friends invite you over for dinner and drinks, Manner suggests that you offer to meet them for happy hour. You can still hang out with your friends, but you’re also making a conscious choice which is better for your budget.
For Mander and Davies, being able to talk about your financial situation can help you get out of debt.
The way out of debt
Mander recognizes that alongside the financial reality you face, there is an emotional and psychological component. While it’s important to analyze why you’re spending, you also need to look at the numbers.
When Mander works with a client, she goes through his credit card and bank statements for the last two or three months. This way, she can show her customers how they can start making different choices with their money, whether it’s cutting down on takeout or shopping at retail.
The next step is to focus on debt resilience. For some clients, dumping all their money on their debt can lead to higher levels of debt in the future. It is important to build an emergency fund while reducing debt so that you are better prepared for unexpected expenses.
Mander points out that building an emergency fund takes time, but it’s part of the normal process.
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