The Surprising Link Between Guilt and Overspending: Does It Cause You To Waste Money?
Written by
Tina Nazerian
Edited by
Cory Dudak
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Picture this: You spend $50 on a textbook for one of your graduate school courses. That same day, you drop $50 on a jacket that caught your eye at the mall. Afterward, you don’t feel guilty for purchasing the textbook. However, you do feel guilt about buying the jacket.
According to Stephanie Zepeda, a licensed marriage and family therapist who provides financial therapy to individuals and couples, there’s a reason for that dissonance. As she explained to GOBankingRates, the reasons behind specific spending can determine whether or not there’s guilt.
For example, some types of debt in our society, such as vehicle debt, are seen as responsible. “But then there’s debt in our society that is seen as kind of unsafe, unwise debt,” Zepeda said. “And that is the debt that tends to get a lot of guilt and shame around it.”
She pointed to having substantial credit card debt, and spending on things that are “excessive” (which she noted is subjective), as two examples. “The reason why we feel guilty around it is because there’s something in us saying, ‘I shouldn’t be doing this.'”
Types of Overspending
There are various psychological reasons why people can end up overspending.
Zepeda referenced a 2021 study that explored a type of buying behavior known as compensatory buying during the Covid-19 pandemic. According to the study’s authors, panic-buying and revenge-buying are two kinds of “compensatory buying behavior and a coping strategy for alleviating the negative feelings” people felt during the pandemic.
Then there’s compulsive buying, which Zepeda said is a type of buying wherein people purchase things without really thinking about it. Compulsive buying, she noted, is related to obsessive-compulsive disorder, but people can have “tendencies of compulsive buying” without matching the criteria for having OCD. “Grocery stores have known this for years,” she said. “That’s why they put the candy bars at the checkout line.”
Zepeda explained that both types of buying behaviors can cause people to feel guilty once they realize they shouldn’t have spent that money. She also noted that people can feel guilty immediately — but not always.
“Sometimes they’re very much living in the moment; they’re very much enjoying it,” Zepeda said. “But then later on down the road, when they have lots of credit card debt built up, they think, ‘Oh man, I shouldn’t have done that.'”
How Guilt Can Fuel More Spending
These days, Zepeda said, people are no longer just “keeping up with the Joneses” (i.e., competing with your neighbors when it comes to possessions, cars, housewares and more).
“We are keeping up with the Kardashians,” she said. “We spend so much money keeping up appearances.”
Essentially, she noted that spending money and feeling guilty about it becomes a cycle. Feeling guilty about spending and not wanting to face it, people end up practicing “financial avoidance.” Then, wanting to avoid the guilt, consumers don’t examine their spending habits and, as a result, the spending gets worse.
“That’s the path by which guilt can lead you to spend more,” Zepeda said.
Pragmatic Steps to Getting Back on Track
As uncomfortable as people are when experiencing guilt, Zepeda said that guilt serves a purpose and is “beautiful if you use it well.”
“Guilt is useless if you just sit there and feel bad,” she noted. “Don’t just sit in the guilt. That’s toxic guilt. That’s not helpful to anything.”
Instead of feeling bad, she explained, people should use guilt as a guide to course-correct. As for how people can get their spending habits under control, the first pragmatic step Zepeda recommended is knowing the numbers they’re working with.
“You cannot know if you’re overspending unless you know what your income and outgoing expenses are,” Zepeda said. “So first things first is get an annual budget. Every year, do an annual budget.”
The second pragmatic step Zepeda advised is to set up a discretionary budget. People should calculate the monthly amount they’re supposed to spend, including on “fun stuff.” Setting aside discretionary money for fun things is essential for overspenders because it lets them “know their limit.”
Relational Steps to Getting Back on Track
There are also relational steps that can help people get a handle on their spending. The top relational step, said Zepeda, is detoxifying guilt by using it to “let you know what you’re supposed to be doing,” namely, “buying more intentionally.”
Toxic guilt, Zepeda added, can make people isolate. That’s where the second relational step comes in — “opening up to trusted others,” as it “helps when the people closest to you know what you’re going through” when trying to alter spending habits. For instance, if your friends know that you’re struggling with overspending, they’re less likely to expect you to spend on an expensive brunch hangout.
Moreover, she explained that by sharing, people might learn that they’re not the only ones dealing with overspending.
“Many times, you’d be surprised that your friends might also open up to you about their overspending as well,” Zepeda said.
Zepeda added that anyone in a healthy, non-abusive, long-term relationship should “open up” to their partner about their overspending. That can be difficult, she said, especially if there’s been “financial infidelity” where one partner has hidden their spending from the other. However, she explained that when one partner’s debt is the other’s, it is “really important to bring them into the conversation.”
The Bottom Line
After opening up to trusted people, Zepeda said it’s time to take action by implementing accounting steps such as monthly reconciliations to evaluate spending — and setting the annual budget described above. She noted that now is a great time to develop an annual budget to plan for 2024.
“A budget is not just a bunch of numbers,” Zepeda said. “It is a reflection of what is meaningful and important in your life.”
Overspending, followed by guilt, followed by more overspending can become a vicious cycle. However, by confronting one’s guilt rather than avoiding it, one can use it as the fuel necessary to achieve financial responsibility through the pragmatism of careful budgeting and the detoxification of buyer’s guilt.
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