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Does it Pay to be Obsessed with Money?

Money, money, money, always sunny, in a rich man’s world. If ABBA sings it, could it possibly be untrue?

In my previous article I focused on the negative impact money, mainly lack thereof, can have on mental health. As the Dutch saying goes: you might have too much month left at the end of your money. It is hardly surprising that having too much month left, is stressful. The long-term effects of stress on mental health are known, and they aren’t pretty.

However, there are other ways money can hold you in its thrall, and they don’t require a lack of money. No, rather they require that you have money to begin with. But man, these type of obsessive behaviours take all the fun out of having money and spending it.

Bargain Hunter Like a dog on a scent. I can just imagine Kommissar Rex hunting for a criminal, in a bargain store.

One of my close friend’s dads has a knack for this as well, although he sticks with regular stores. When going grocery shopping, he knows exactly what is on sale where, and what is cheapest overall. But here it comes: grocery stores tend to have on different deals, making different things suddenly cheaper than the already cheapest option somewhere else. Now what do you do? Do you calculate an overall total and just pick the store that ends up with the highest score, and lowest price tag? Of course not. He just goes to all the stores. Starting at store 1, he picks up what he needs according to his bargain list, then moves to the next store and continues until the list is complete and all the bargains are to be had. Can’t beat that reasoning.

Now keep in mind, that we should also place a value on time. With all the additional time of going to and from different stores, did he really get the best deal? Maybe according to him he did. According to me? I’ll skip this one.

Strangled by Purse Strings Even if it requires a lot (or just a fuck ton) of time, most bargain hunters end up being happy with their purchases and themselves. There is no real harm done, and we move on. It might even make for some fun stories. They are the oddballs of financial obsessiveness. The group I’m describing next are not oddball, and no fun stories will be told about them. They are more like masochists.

Why are they masochists? Because they track their spending to no end. It is likely that they don’t use cash, but that they use card exclusively to track every single cent, pence and penny. I kid you not. Now you’re probably wondering, so what? If someone checks at the end of the week how their finances are holding up that is their business. Hell, even if they do it on a daily basis just to be sure, that’s hardly kinky is it? But I’m talking OBSESSED. I’m not talking once a week, nor even once a day. I’m talking after each and every purchase. As if someone keeping track this closely cannot update their mental balance correctly.

If you’re on a budget I can imagine that this might help and be necessary. It has to do with the pain of paying. You experience negative feelings when buying something (because of “losing” the money you have to exchange it for). Now this happens during the purchase, but who says it cannot happen after by re-living the experience through your online bank account? Look at it again, see again the money you have spent, now not mitigated by the immediate pleasure derived from whatever you have bought, and I can imagine the pain felt. People might be able to use this tool to curb future spending, because no one likes to repeatedly feel pain.

It’s because of this method that people tend to spend a lot less than if they did not track their spending and felt the pain. But if it’s unnecessary, why do it? Even if it is slightly necessary, why do it constantly?! Do you need to inflict pain after every purchase? After every piece of gum purchased?

I mean think about it. Think of your own bank statements. Those things are cluttered with small expenditure (and a few large ones throughout). Imagine ALLL THE PAIN. There is a limit to how much pain you should inflict upon yourself with regards to your finances… Could someone make that a law please?!

Reason why this behaviour isn’t helpful at all, even when on a budget is that after a while you become utterly desensitized to (this type of) pain. It will just hurt, rather than change your behaviour if it hasn’t already. How do I know this? Simple conditioning. Also, I’ve done this to myself. I’m still a spendthrift. Tightwads beware!

The Hungry Caterpillar Everyone’s first (and favourite!) book as a child: the hungry caterpillar. Or in Dutch, Rupsje nooit genoeg (little caterpillar never enough). And God does that apply to people.

They don’t accrue money just because they need it. Because they lack it. No, they CRAVE it. They want to see the numbers on their (many) bank accounts go up. And up. And just through the roof really. It is never enough. It is these types of people that forsake any other activity that does not make money. These are the people you see in tv series: the successful, but too busy mom, the dad who can’t talk to his son because he hasn’t had an actual conversation with him in decades, because of work. Because of never being around really.

There is an issue with this type of obsession, because this is often an obsession that has an actual grounding: plenty of people have started this behaviour by initially needing money. People from impoverished backgrounds who now have to provide for others can easily fall into this trap. They know life without money, and they know how many things money can buy. But it cannot buy love nor time. And that is something to think about when you have made another fortune, yet haven’t seen your kids grow up, or have lost the connection with your spouse, friends and family.

Even if there is no one to provide for but themselves, a desire to never be poor (again) can be a great motivator for working till death do you and job part. But maybe another thing to keep in mind: when you die, you can’t take it with you…

Both Eyes on Stock It can be argued that the type of people I’m about to describe are just a different type of caterpillar.

If you have invested a (significant) amount of money in stocks and have a lovely app for tracking them, I hope you’re not easily addicted. Because the highs from gains and the lows from losses can be compared to a shot of heroin. Buyer beware.

I think this type of behaviour is one of the key influences in overtrading. We want to get rid of the losers and buy more of the winners. The transactions costs alone outrank the gains and cannot make up for the losses. And are you sure you are even getting rid of the losers? This type of behaviour also led to the now famous disposition effect. Showing that we hold on to losers, hoping to recover our losses and sell the winners to ensure that gain. We focus too much on the short-term developments and as such fail to see larger trends. So, keep that in mind. Delete the app, don’t check daily. Or it will cost you.

Despite me having called this blog Money on the Mind, I don’t qualify as being obsessed. I don’t count every expenditure, nor travel hours for a bargain and am on too low a wage to get an accumulation high. With regards to stocks I mainly trust my advisor (hi dad), so I don’t go insane.

So yeah, I don’t always have money on my mind. And although I do appreciate you, dear reader, neither should you. Please go think of something else!


Behavioural Science

Personal Finance



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