Welcome to The Wealthy Mom MD Podcast—a podcast for women physicians who want to learn how to live a wealthy life. In this podcast, you will learn how to make money work for you, how you can have more of it, and learn the tools to empower you to live a life on purpose. Get ready to uplevel your money and your life. I'm your host, Dr. Bonnie Koo.
Are you an overspender? Then this episode is for you. I'm going to go over why you overspend and why traditional budgets and no-spend months typically don't work. I like to talk about budgets in the context of losing weight, because all of us can relate to that. You know, when you try to lose weight, we usually go on a diet and basically budgets, for the most part, are like spending diets. And I think we can all agree that diets don't work. They only address the actions you take and not the underlying beliefs. Remember thoughts create our feelings; feelings create our actions; and actions create our results.
You can learn all the things, all the ways to lose weight--skip breakfast, intermittent fasting, no carb diet, et cetera. But when you go back to your “normal eating life,” you haven't really dealt with why you even overeat in the first place. You're just going to gain the weight back. And the same thing goes for spending. What's important to understand is that there's always two battles going on inside of your brain. It's the battle between our toddler or primitive brains and our adult brain, or prefrontal cortex. Left to your own devices, the toddler brain will almost always win because it wants things now and it wants it fast. Whereas our adult brain, our prefrontal cortex, can make decisions ahead of time. It can plan.
Now the goal is to become a cautious spender versus what I call a pleasure spender or uncautious spender. So let's first talk a little bit about pleasure seeking. There's something called a motivational triad. And if you don't know what it is, there are three things our primitive brains love to do. It's motivated by pleasure. It's motivated by things that are easy, meaning that if something seems complicated, it doesn't want to deal with it. And then the third thing is it's motivated by avoiding pain.
I'm going to focus on the pleasure part. Now, I first want to say that pleasure is essential to our survival. Otherwise life would be really dull and unfulfilling, right? Like when you're thirsty and you drink water, you feel satisfied. You get the pleasure of feeling quenched. You get a little score of dopamine, but you're not craving water like you would maybe a glass of wine. And you're not thinking I want more, but I shouldn’t. If you're satisfied, you get your little hit of dopamine and you move on with your life. This is what I call a true or natural pleasure. So why does it overlap with spending for my overspenders? That is it's because overspending can be a false pleasure and you get a hit of dopamine and your brain keeps wanting that hit of dopamine.
The problem is these false pleasures, and I'm talking about overspending, but it applies to things like overeating over drinking over anything. The problem with these false pleasures is that it gives you a net negative effect. So in the case of overspending, it can cause debt or it will prevent you or really slow you down in terms of reaching your financial goals. You get the short-term pleasure of feeling good about what you bought by giving into the desire to spend. What you're trading off though, is the long-term pleasure is financial freedom and wealth. And isn't that the real pleasure? Our brains create heightened desire for false pleasures.
So let me give you an example. Remember our brains think pleasure is required for survival. I'll use an example of shopping who loves to shop. If you have a tendency to overspend when you shop, your brain is going to get clued in to all the things related to that shopping experience. So let's say you make plans with some friends to go on a shopping trip. As soon as you make those plans, your brain starts squirting you a little dopamine in anticipation. You start thinking about that experience and the pleasure you'll derive from it. When you go to that store, maybe you have a weakness for shoes. You go to that beautiful shoe store. And as soon as you walk in and some of these high end shoe stores, they bring you a glass of champagne, whatever that whole experience, as soon as that experience starts, your brain starts squirting some dopamine because it's anticipating the pleasure of you purchasing. All that is going on is that you want something and you have the desire to spend and you keep answering that desire.
Now I'm sort of exaggerating, but for some of you, this isn't an exaggeration. All of us can relate to overspending to some degree. We can all relate to buying something that we later regret. We got caught up in the moment or we saw a Facebook ad. It seemed like a good idea. And so what I want to offer is that if you want to, you can actually unlearn this desire to spend. People get a little tripped up when I tell them this, because our innate desires, the things we like to spend money on. For example, I like pretty shoes. It seems like that's part of our identity. So the idea that you can actually unlearn, that seems a little scary.
The analogy I love around this undesirable type of thing is like, think of someone you dated in the past or someone, you had a super crazy crush on. Think back to when you were a teenager and you no longer have that crazy crush, but can you remember how crazy you were about that person? Right now you're like “What?! Who?!” It's kind of like that. So yes, you are able to undesire something if you want to.
There's actually a process to do this and you can learn this process. Now, most of us don't know how to handle the cognitive dissonance of wanting something badly, but then also knowing that we shouldn't. If we want to attain something like financial freedom, we're also worried about feeling deprived.
Here's what I want you to start practicing. Allow the desire to spend, and don't answer it. If you do this enough times, the desire decreases. You're basically on the pathway of retraining yourself here.
So I'm going to do a little bit of an aside here. So none of us went to emotional school. At least I didn’t. And none of us really know how to manage our emotions. The desire to spend after seeing something and thinking, “I want that” builds desire. Desire is a feeling. There are four ways to deal with feelings. You can resist. You can avoid it. You can react to it. Or you can simply allow the feeling. When it comes to the desire to spend, most of us just try to resist using willpower. The problem is willpower is limited. Or we avoid, right? We just avoid going shopping. We avoid anything that could put us in a position to overspend. Or we react. In this case, reacting to a desire to spend is to buy the thing. But how many of you have just allowed the desire to be there to percolate? Don't resist it, don't avoid it. And don't react to it.
When I say this to my students, they get a little confused. They're like, “What do you mean by allowing?” Because so many of us don't know how to do that. Then they ask questions like, “Well, what does that look like?” It just looks like you sitting there experiencing the discomfort of not answering that desire. I'll tell you it doesn't feel that great, but you can definitely do this. That discomfort is temporary.
Now, you will probably get it wrong initially, meaning that you'll probably resist or avoid, or you might give in and that's totally fine. The key is to practice allowing this desire. Allow it and you'll get better at it. This is new. So of course you're not going to get it right the first time. One thing I tell my students to do when they're trying to allow desires around overspending or over-anything is to get a glass Mason jar or any sort of vase type thing--but it has to be clear and see-through--and get some pretty things to put in it, like pretty marbles. I actually don't have any marbles, so I'm actually currently using coins. All of us have a jar of change somewhere. And what I like about using coins--this is totally a money analogy--is if I allowed a big, strong desire, I'll put a quarter in, but if it was just a normal desire, I'll put a penny in. I know it seems silly, but it works for me.
The reason why you need this jar to be see-through is because you want to be able to see all the evidence that you've been allowing desires, because you're going to “mess up” and give in and react to things. That's okay. But when you look at that jar full of the progress you've made so far, it kind of reminds your brain that you're making progress. Remember that our brains love to focus on what's not working and love to focus on the negative.
Now, in the previous episode, I talked about goal setting. Goal setting requires you to use your adult brain to think ahead of time and plan ahead of time. So I really like to think of a budget as really a spending plan. Truly, what it means is that you are making decisions ahead of time about how to spend your money. Because if you have goals to reach financial freedom, flexibility, wealth, whatever you want to call it, it's going to require you to spend money in a certain way and save money and put money aside to acquire and grow assets.
In the moment when you see something shiny or something, your toddler brain’s going to say, “Hey, we should get that.” But if you've made decisions ahead of time and stick to those decisions you made, it just becomes so much easier to say no or to say yes.
An objection I commonly get with spending plans, budgets, whatever you want to call them is that people want to have the ability to be spontaneous, or you want to be able to buy things and not think too much about it, but you can plan for that. You can plan a certain amount of money where you don't need a reason to buy it. You know, a student of mine was telling me how she loves to always buy something memorable whenever she goes on a trip. And I said to her, “Why is that a problem?” And she said it was a problem because sometimes she really doesn't find something she really likes, but then she just wants to spend the money. And then so I said, “Okay, so you need to make a plan ahead of time.”
What I suggested to her was to kind of create a protocol or some rules around the spending. First, set aside the money--whatever that amount is. I think I suggested $500 in her case. And maybe the rule is she'll only spend it if she loves what she's going to buy instead of forcing herself to buy because she wants to spend and to make these decisions before the trip.
Because here's the thing. If you don't make these decisions beforehand, whatever the situation is, guess what? Your primitive brain is going to win. Unless you use lots of willpower, which is just resisting, which just doesn't feel good. Plus it's exhausting. There's only so much willpower in a day.
All right, that's all I've got for you today. See you next week.
Hey, if you're a woman physician who is ready to take control of your money, you've got to check out my program Money for Women Physicians. It's part course and part group coaching and a hundred percent guaranteed to put more money in your pocket. Go to wealthymommd.com/money to learn more.
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