Do you have a high-yield savings plan yet? What does your investment portfolio look like? What about NFTs—have you started a collection on OpenSea? Discussing your finances in 2022 can be an overwhelming experience, especially with a rapidly rising digital economy and new e-investment services popping up every few weeks.
But let’s get back to the basics. One of the key tenets of personal finance is building healthy savings. Saving money looks different for everyone—and sometimes it can feel like no matter how hard you try, you never seem to put away enough funds. Whether your savings account is being drained by impulse shopping sprees or just unrealistic budgeting, money matters have only gotten more complicated since the onset of the pandemic.
According to financial coach Ellyce Fulmore, there’s much more than we think to why saving money can seem so difficult. “Money is a multi-faceted, socially-constructed concept. It’s not as black and white as people often think,” she says. Fulmore is a rare face amongst the current landscape of finance and life coaches—she is female, queer, under 30 years old, and has personal experience with a host of mental health issues that allows her to truly understand what her clients go through. “I myself have ADHD, anxiety and depression, so I have a good trifecta working against me,” she laughs. “The clients I most commonly attract have similar mental health conditions as well, and I see very similar behaviours and patterns among them, like uncontrollable impulse spending in search of a dopamine hit.”
This is the core concept that underscores Fulmore’s philosophy—at the root of every money-related behaviour, there is a deeper motivation often tied to mental health. The state of your mind translates into behavioural patterns, which in turn form habits that can severely impact your financial health, both in good and bad ways.
The science behind impulse spending
“For clients who struggle with impulsive spending, the root cause that I often see is under-stimulation,” says Fulmore. “Their search for stimulation can lead to impulse spending to get that dopamine hit that they’re lacking. People with mental health issues like ADHD and anxiety also tend to struggle with time management, which can result in more spending.” If anxiety issues cause you to chronically being late or lose control of your schedule, chances are that you’re often spending money on cabs and eating out. These may seem like small expenses in the short term, but they add up to a significant portion of your total spending in the long run.
Impulse spending rarely happens in a vacuum. Factors like anxiety and body image may be behind uncontrolled spending habits
Excessive spending is also often an unhealthy coping mechanism, as per Fulmore. “People who are struggling with their mental health create cues for negative emotional states. Let’s say that every time you feel sad or anxious, you fall into a pattern of buying something or ordering takeout. So basically, you’re creating a habit without evening realising it and conditioning yourself to react by spending money every time this particular emotional state comes up.”
As for clients who experience manic episodes, huge impulse spending sprees can be par for the course when coping with their mental health struggles. “I have clients who have spent so much money in one night and not even remembered it the next day. This is a hard thing to understand if you have never struggled with your mental health on that level, but behaviour like this can affect your finances very, very deeply.”
The key thing to understand is that impulse spending rarely happens in a vacuum. If you find that your spending is out of your control, consider the other factors in your life that might be influencing this behaviour. Body image issues, for example, could lead to excessive spending on clothing if you feel that nothing you buy fits you right. If you’re struggling with a binge eating disorder, you might consistently be spending unplanned amounts of money on late night food delivery. Spending habits like these can be extremely personal, sensitive and difficult to modify—but they are not impossible to improve.
Fulmore agrees as much: “The most important thing while creating a budget is to understand why you make the financial decisions that you do, and how well they reflect your values and financial goals. Often, people find a standard budgeting template online and try to punch their numbers in. Nine times of 10, it doesn’t work, and the user gets incredibly frustrated at themselves for not sticking to their budget. But the problem is that this budget was never going to work for you anyway.”
Creating mindful money habits
So, what are some solutions? Fulmore first examines her clients’ core personal values and goals so that she can create a sustainable budget that truly suits their lifestyle. “It’s not always that they need to spend less money—sometimes, they just need to redirect their money to areas that actually make them feel good. We work on putting intention back into their spending, so that the things they buy bring them genuine happiness and fulfilment.”
“See the money you spend on mental health upkeep like a bill and treat it like essential monthly expenditure rather than an option”
When it comes to problematic spending behaviours, Fulmore suggests first identifying and understanding your triggers. “When a client is really struggling with impulse spending, we try to figure out what happened before that desire to spend kicked in. Did they have a really bad day at work, or get in a fight with their significant other? Were they really anxious all day? Then we can work on replacing the unhealthy spending habit with a healthier coping mechanism. I usually work with them to find a replacement that doesn’t involve money at all—it might be moving their body, or some form of art they enjoy. There are a ton of options, but the awareness piece is the most important. Then we can think about addressing your immediate gut-reaction behaviour.”
One of her key tips? Treat the money you spend on mental health upkeep like a bill. “I always tell my clients, if you need to buy medication or if you go to therapy, or if it is even the gym or a yoga class that helps you manage your mental health, treat those things like essential monthly expenditure rather than options. Don’t think of them as luxury purchases, try to really prioritise them. Because we know that once we let our mental health slide, every other area of our lives is really impacted as well.”
And above all, Fulmore has a reminder for everyone working on improving their financial health this year: don’t be too hard on yourself. “You’re allowed to buy things, even if they are not traditionally seen as “smart” purchases, as long as they bring you authentic joy. The bottom line is that if you truly enjoy your daily $7 cup of Starbucks, it is not going to be the thing that bankrupts you.”