We are not all born with a winning hand. Is this why so many of us are willing to take riskier gambles with our hard-earned money? By the way, this post isn’t about betting and casinos, but about the innocent risks we take monthly.
According to the latest General Households Survey from Statistics South Africa, half of the South African population is in debt, navigating the challenges of keeping the lights on and the food on the table – which is why the characteristics of The Gamber will be a lot easier to spot.
We kickstarted a popular new series in 2023 – focused on the fascinating psychology behind our individual approach to money. This includes the overly cautious ‘Hoarder’ and The Avoider’ (who seeks out a bargain with the enthusiasm of a hamster on a new wheel). In this post, we will explore the traits of ‘The Gambler’. According to the latest General Households Survey from Statistics South Africa, half of the South African population is in debt, navigating the challenges of keeping the lights on and the food on the table – which is why the characteristics of The Gamber will be a lot easier to spot. Let us delve into this type of money behaviour and explore how to effectively manage finances during uncertain times.
The Gambler: Impulsive Spending and Regret Buys
The Gambler is known for making quick and impulsive spending decisions without much thought or consideration. They may struggle with managing their finances and often find themselves regretting their purchases later. However, it is important to understand that there are underlying root causes for this behaviour. Our mindsets, emotions, history with money, and personal values over time all contribute to the seemingly automatic decisions we make when it comes to our finances.
It is worth noting that while we may not fully identify as The Gambler, we may exhibit core traits of this money behaviour type from time to time, especially during uncertain financial conditions when we may feel desperate to find a quick win – or a dose of dopamine. For example, the psychological theory of the Diderot Effect, which comes into play when we are dissatisfied with what we have, can trigger impulsive buying to fill a void. We see this when people start their New Year’s Resolution ‘This year I will go to the gym and be a better, more awesome me’. They buy a pair of shoes for the gym, but then none of their clothes match, so they buy a top to match, and then some must-have tights. At this point, it seems only reasonable that sweatbands, a new water bottle, Bluetooth headphones, and maybe even a yoga mat, must be bought as well. You can see where this is going. This compulsive buying to fill a void feels altogether necessary. The Gambler amplifies the impact of the Diderot Effect.
Cutting Losses and Building a Budgeting Mindset
So how can we prevent falling into the trap of impulsive spending and regret? One effective strategy is to remember that desire does not necessarily equal value. When the urge to buy something arises, it is helpful to pause and consider if there is a genuine need for the purchase or if we can use something we already own. Will those new gym shoes turn you into Usain Bolt? This simple step can help curb impulsive spending and minimise regrets.
Another crucial tool for managing finances is budgeting or like I like to call it a spending plan. Instead of viewing budgeting as a rigid target, we can shift our mindset to see it as a rewarding plan. Setting a maximum spending limit within our budget can also help us resist temptations brought on by the Diderot Effect. By consciously tracking and controlling our spending, we can take charge of our finances and make intentional decisions aligned with our long-term financial goals.
Overcoming Challenges in Money Management
It is important to acknowledge that there are understandable challenges that may hinder our ability to effectively manage our money. Common obstacles include fear of making the wrong decision, lack of confidence in financial matters, and procrastination. However, it is essential to address these challenges to ensure our financial well-being.
By cutting our losses, building a budgeting mindset, and overcoming challenges in money management, we can take control of our money and work towards achieving our goals. Remember, managing personal finance is a skill that can be developed and improved over time, and seeking assistance when needed is a proactive step towards financial success. If you want to start straight-away, (like a New Year’s Resolution for April), why not get a free 15 connect session to turn money into a win-win?