Has payday spending reached pandemic proportions?

fancy carThe arrival of the monthly pay cheque into our bank accounts seems to be the starting gun for a few days of reckless spending (irrespective of what bills are due, or debts outstanding).
Millionaire weekends are enjoyed by many who spend the rest of the month eating porridge and baked potatoes and are overdrawn at the end of it.
Supermarket trolleys are fuller after payday; so are pubs, restaurants and shops. Some of us don’t even wait to leave the office but spend online as soon as the money hits our accounts. Apparently we spend around 9 days a year online shopping from our desks.
So, why do we feel the need to spend so fast, and, sometimes, so thoughtlessly? And what’s the difference between comfort spending and compulsive spending?
This latter type of spending has been given a name – oniomania and is considered a type of obsessive compulsive disorder; right up there with addictions such as alcoholism, eating disorders, or substance abuse.

A sense of proportion

There are some key differences between comfort and compulsive spending. Like any form of addiction a key question is whether your spending is damaging any other part of your life?
There also appear to be gender differences. About 90% of those affected by oniomania are women (some researchers think there’s a higher prevalence of compulsive shopping in women due to lower levels of serotonin).
By contrast, payday spending is enjoyed by men and women in equal measure, although what they like to buy differs – men being more fond of gadgets and women drawn to clothes.

Payday spending research

pennyCashback and rewards site Quidco researched 2,000 people and found that 35% of Brits routinely spent the majority of their monthly wage within days of being paid. Some 7% get through most of their salary within 24 hours.
Interestingly, 37% attempt to stick to a monthly budget for it to “never work out”. We find the budgeting aspect of this worth more digging. Another statistic in the research was that 13% of those interviewed claimed they had “never been taught how to budget”.
No doubt mums and dads are getting really hot under the collar at this stage and muttering about pocket money and teaching children the value of money; piggy banks and the like. But, you see, that could be part of the problem.
Cash in your hand – whether that’s a couple of quid given to a 10 year old, or a wage paid to a grown up – has a certain reality to it. Back in the day, pay came into the home in a small brown envelope. When it was gone – it was gone.
Now most of us get paid electronically and only see a fraction of our money in cash. We have access to credit cards and overdrafts. Pocket money doesn’t really prepare us for that. You can get older children to use bank accounts and cash cards, but that only addresses part of the challenge.

Why we spend

Interestingly, not all payday spending is me obsessed:

  • 25% of us splurge on a big night out with friends or family following pay day
  • 20% purchase things for the home.

But a lot of payday spending has to do with rewarding ourselves for a tough week in the office, or putting up with a rotten boss. The problem is that money spent on the first Friday of the month doesn’t stop Monday coming round with the usual frequency.
Maybe some adjustment to our working lives might make the difference. Or we can adjust how we spend. Would a big night in with family and friends achieve the same result as a “big night out”, but at a fraction of the cost?
Can we move important payments, such as mortgage or rent, so they come out of our bank account just after payday, giving us a more realistic picture of what’s left to play with.
And can we make our payday spending more real, by take cash out rather than spending everything on a card (or two, or three). Try wrapping an elastic band round your credit card so you have to unwind it before you use it. We note a couple of banks now offering wrist bands that deliver an electric shock when you go overdrawn but we think the self-help version is much better. Or leave the plastic at home. Even try slipping your shoes off as you browse the clothes rails (honest), to make your shopping more mindful.
And maybe think of carrying out a comfort spending audit. Take all those payday splurges out of the cupboard and put them on the floor. In one pile put all the things that are still giving you pleasure and on the other, pile the things you would, truthfully, rather not have bought. Now photograph the “oops” pile and make it your phone screen saver. After all, it can’t do any harm.