Overspending is often a misguided attempt to meet an underlying need. It could be the need for a thrill, a need to show love, or a need to feel powerful. By understanding the different reasons why clients are overspending, you may be able to help them overcome this damaging habit. The key is to satisfy the underlying need; if overspenders don't find another outlet for getting those needs met, any positive changes in their spending habits are unlikely to stick.
Common Reasons Why Clients Overspend
1) To relieve bad feelings. This category includes people who spend when bad things happen (like not getting a promotion they were hoping for) and people who are trying to fill an emotional hole with their spending. The tendency to turn to "retail therapy" is understandable: for many people, shopping produces a spike of dopamine in the brain, which feels really good. The problem is that dopamine's effects are short-lived; when they vanish, many overspenders are left with feelings of guilt—and an item they no longer care to have.
How to help: Encourage clients who self-medicate with shopping to find healthier ways to relieve bad feelings. They might try exercising, volunteering, painting, writing, or another positive activity. Have them make a deal with themselves: they can go shopping only after an hour of another activity that provides a longer-lasting and more fulfilling kick. When the hour is up, they may find that the urge to spend has passed.
2) To celebrate. Some overspenders use money to celebrate when good things happen.
How to help: Have these clients ask friends and family to help brainstorm new ways of celebrating that don't break the bank. The brainstorming itself may help the client feel more taken care of—and possibly even nudge him or her toward celebrations that focus on loved ones rather than on spending.
3) To empower themselves or get even. Money is often used as a source of power in relationships. Clients may overspend if they feel that their voice isn't heard in the relationship or that their partner is controlling them. To get even, or squash feelings of helplessness, they spend money, sometimes hiding their purchases and other times throwing them in their partner's face.
How to help: This behavior may stem from the client's past, or it could represent something in his or her current relationship. Either way, unless the client's partner is willing to discuss it, this situation will probably require a counselor's help. If the couple is open to the conversation, ask the overspending client to think of one or two concrete things that he or she could do—or that his or her partner could start doing—to feel more in control. Remember, this kind of scenario is often quite complex, so take it one step at a time.
4) To show love. Some clients overspend on friends and family to show love. They are often replicating behavior they saw as children, or they may be attempting to make up for a perceived inadequacy elsewhere (not being intimate, not being home, etc.). In some cases, this kind of overspending arises from a misunderstanding that can be relatively easy to resolve (e.g., the husband thought the wife wanted/deserved all the luxuries in the world and ended up working incessantly to afford them). Other times, the scenario is much more complex (e.g., the client isn't sure how to be loving or close, so he or she makes up for it with lavish purchases).
How to help: Facilitating a conversation about the overspending client's values—and discussing other ways to show appreciation for family and friends—may be productive. Beyond that, a referral to a counselor could be in order.
5) To keep up with the Joneses. The motivation here is similar to that in the last case: proving something through spending. Rather than projecting a loving image to family, however, the need to keep up with the Joneses is about maintaining one's status in the community.
How to help: A conversation about values can be quite useful here as well. Does the client have any friends with whom he or she doesn't feel the need to do this jockeying? Posing this question may prompt the client to spend more time with friends who aren't hung up on his or her spending habits—or to find new pals. This may involve pursuing new activities, hanging out at new gathering spots, and the like.
6) For the thrill of it. Two types of people overspend almost entirely for the dopamine rush: gamblers and bargain hunters. The prospect of making more money entices gamblers to overspend, while bargain hunters simply can't resist a "good deal."
How to help: In most cases, this kind of overspending is a true addiction. The best solution is likely to help the client find a counselor or support group. Try www.gamblersanonymous.org or www.debtorsanonymous.org.
Many cases of overspending involve a heavy psychological component. If you don't feel comfortable dealing with a client's situation, your best bet may be to refer him or her to a professional therapist, a helpful book, or even a debt counselor.
How have you dealt with clients who overspend and jeopardize their financial plans? Share your thoughts in the comments below.