3 ways to control your spending in 2014

Science has thrown up some fascinating facts about how the brain operates when we're in consumer mode, and the processes at work when people over-spend. 

Apply some science to control your spending

There are three main factors at work - and to watch out for - if you want to keep spending under control in 2014:

1. Biological Factors: Don’t go shopping if you’re hungry, pre-menstrual or have just emptied your bladder.

You may not realise that your physiology is affecting your behaviour. But when you're hungry you will buy more food and make higher calorific choices at the supermarket. When in an anxious state you will be more likely to impulse-buy. That's because the physical state of high arousal leads to a depletion of the resources that govern self-control. And fluctuations in activity in the brain’s orbitofrontal cortex during the menstrual cycle will make you more likely to go on a spending spree when premenstrual. And more rational and controlled post-ovulation. Even an empty bladder affects your brain’s control mechanisms. Science has shown you’ll be more likely to (sorry) splash out if you’ve just spent a penny. So pay attention to your body before hitting the shops, it may be telling you to hold fire.

Try timing shopping trips with your menstrual cycle and avoid the pre-menstrual phase

2. Emotional factors: Don’t shop if you’ve just had a row, a stressful day or been dumped by your boyfriend.

People experience a range of emotions (anger, fear, sadness) in their daily lives and engage in all sorts of behavioural responses to keep them in check.  Some women find shopping gives them an emotional outlet, the way that alcohol or drugs can do for others. It distracts them from negative feelings and provides comfort in the form of a treat or reward. In fact studies of compulsive buying have shown that its prime function is to repair mood. So spot when emotions are running high and find an alternative way of releasing them. Find  distraction through exercise or relaxation, or seek social support by spending time with friends. Concentration, whether on gardening, painting or rock-climbing, is also a good way to absorb negative emotions. And the Do Something Different approach to behavioural change could help see you through the tough times because it's all about about breaking habits and increasing behavioural flexibility.

Buyer's remorse is like a shopping hangover

3. Cognitive factors: Don’t go shopping with low self-esteem and an “I deserve it attitude”.

Impulse purchases can trigger a lot of self-justification in the consumer, to assuage the guilt of over-spending. Their thoughts echo with the messages that have been implanted by constant brain-washing and bombarding marketing campaigns. Thoughts such as “Why shouldn’t I have it?” “I work hard I deserve it” “My friends will love me for it” and so on. Self-talk can also shift the focus onto the wrong things, “I’m saving £100 by buying this in the sale” (instead of, “I’m spending £200 I don’t have") or even "I'll show him!" Some cognitive reframing can help here. Relabel your credit card your debt card. Silently answer the ad-men back. Recall when you last had buyer’s remorse and tell yourself how you’ll feel tomorrow. And find ways to boost your self-esteem so that you can resist the constant bombardment of persuasive messages. 
Few people greet a large credit card bill with the words, “Because I’m worth it”.

What's your Style Identity? (and should you care?)….

A pair of turquoise PVC shorts. A neon jumpsuit. A hand-knitted corset. Just some of the drastic style boobs that three friends owned up to when surveyed recently. And who hasn’t bought something to wear and, on getting it home, found that it's less of a ‘Wow” and more of a “Why???”!

That’s why I was thrilled to get involved in a project with TKMaxx and The Times T2 to help people discover their Style Identity. It's just launched today. 

When we're muddled about what suits us, confused about the style that matches our personality, we risk making expensive mistakes and creating a look that misses the mark. It's not enough to rip a style from the catwalk, magazine page or shop window and simply put it on. That look was designed for someone with a different body, a different personality and a lifestyle that’s nothing like yours. So it’s unlikely to work. It might scream, “This isn’t me”. Worse still, it could hide the real you and leave you sartorially dissatisfied, starved of self-expression. That's why dressing from the inside out, from your identity and your unique personality, is so vital.

Research shows that when we change how we look, the change isn’t purely physical. 

Changing how we look changes how we behave. 

It changes how others react to us (positively and negatively). 

It can even change how we think and feel. 

So pulling a dress off the wardrobe or shop rail is no benign act. It could have a knock-on effect for your whole day. Or even your life. I’m digging deep into the psychology behind this in my new book about fashion psychology, ‘Mind What You Wear’. It'll feature the TKMaxx/Times Style Identity questionnaire as a way for people to really get ‘behind the seams’ of their own identity. 

Romance, Retro, Glamour, Bold or Street Chic. What's your style identity?

If you haven’t already checked out yours, go over and do the Style Identity questionnaire. It only takes a few minutes. And don’t forget to share your results with your friends. 

I've created five identities based on how an individual's personality type and lifestyle translates into clothing. The identities are Romance, Retro, Glamour, Bold and Street Chic. Your answers to the questions will reveal which you are. You may think you know. Or you might be in for a surprise. Of course most of us are a mix of types, so your signature and your accent style will emerge from the test. It’s worth giving it a go. When you know what your style is you feel more at one with your image, and those shopping expeditions are made a whole lot easier.

If discovering your identity sparks off some style soul-searching, that’s no bad thing. 
TK Maxx has a fashion philosophy that’s all about being a little bit braver. They want people to ‘put their brave glasses on’. To say ‘maybe’ to the unthinkable. I love their approach because it chimes so well with the Do Something Different movement that I co-founded and passionately believe in. When applied to fashion this all adds up to more brazen experimentation, more pushing at the boudaries and more venturing across the familiar line.

It’s easy to get into a wardrobe rut because it creeps up on us without us knowing. You suddenly find yourself playing it so safe that you're not expressing your true identity. You  start to disappear in a sea of beige. Now's the time to change all that.
TK Maxx say that the only wrong is not trying it on. 
And that’s as true of life as it is of clothing!

TIME ISA MONEY

In the words of that money saving guru, Martin Lewis, it’s crunch time.

The tax year ends on Thursday and if you haven’t used up your ISA allowance, quite frankly, you’re a bit of a mug. There are currently twenty-three million ISA accounts held in the UK. If you have savings you should consider joining them, before the shutters come down at midnight on April 5^th. 

Use it or lose it - there's still time to use your ISA allowance

Essentially, if you're getting a paltry rate of interest on your savings, the tax man will still want a slice of that interest. But stash that money away in an ISA and not only could you earn more interest (rates of up to 3.5% are on offer) but the tax man can’t get his grubby mitts on it. You, however still have access to the money because it needn’t be tied up for years. Seems a no-brainer to me. Little wonder that many people are treating ISAs as their new pensions.

Confession time. I realised today I hadn’t used my full ISA allowance for 2011/12. Everyone can invest £5340 in a cash ISA (that’s like a savings account with a set rate of tax-free interest) and £5340 in a stocks and shares ISA (where interest rates vary along with the vagaries of the stock market). I’d got the cash version but not the stocks and shares one. I asked myself why and had to admit it was probably because I understood the cash ISA more than the stocks and shares ISA.

Yes, I know I’ve written a book called Sheconomics. But I still have the same old blockers as most of you out there. And, as our behavioural change work shows, inertia is a very powerful force….

So I pulled out Sheconomics and re-read the bits about ISAs and, although the annual limits have gone up since we published in 2009, the same old advice holds true. It’s madness not to take advantage of this way of saving, to miss out on earning tax free interest. And you don’t even have to declare the interest on your tax return, making that onerous task easier too.

There's lots of free, useful and easy-to-understand info on-line

Next I set to and did a bit of internet research (bearing in mind advice in a previous blog from rplan to watch out for charges) and, with some help from Martin’s website above, found a Hargreaves Lansdown product that seemed to fit the bill. The HL form only took about 5 minutes to fill in and the information was easy to understand. Selecting a fund was a bit like sticking the tail on the donkey but their intro material had already provided some good guidance about safer and riskier options. 

My next step is to remind my husband to use up his allowance before midnight on Thursday. I’ve done the research for him so he’s got no excuses.

Then from Friday onwards, when the new tax year kicks off I can set up a regular ISA savings plan - most financial groups that run stocks and shares ISAs offer them. They allow you to smooth out the impact of fluctuations in share prices. The 2012/13 allowance goes up to £11,280 per person (all of which can go into a stocks and shares ISA or half into a cash ISA) meaning couples can save £22,560 and all the interest is theirs to keep.

Important ISA actions:

•     *  There’s still time to make the most of this year’s allowance - if you don’t USE IT you LOSE IT. 
•     *  You can open an ISA online or on the phone and most providers are open all weekend. 
•      *  Make sure you have your ID ready, know your National Insurance number and have access to the money you're investing (e.g. your debit card).
•      *  Don’t over-agonise about  your choice of cash ISA, just get one open. As long it doesn’t have transfer penalties you can always change later.

STOP PRESS: Check out Simonne's video on how to compare different cash ISAs.

Why materialism is bad for your marriage

Here’s a quick quiz if you’re married or have a partner:

   How important is having money and lots of things to you?

1.     Not at all important

2.     Quite important

3.     Important

4.     Very important

   How important is having money and lots of things to your partner?

1.     Not at all important

2.     Quite important

3.     Important

4.     Very important

Researchers* asked 1,734 couples in the US this question.

The answers revealed a lot about the state of people’s marriages.

If both partners were materialistic (answering 3 or 4 above) they were likely to have a rocky relationship. If both partners answered 1 or 2 their marriage was much more stable and their relationship quality higher.

The researchers concluded that materialism is bad for marriages.

Of course, this is a correlational study so the direction of causality is unknown. Materialism may affect the quality of a marriage, but a bad marriage may also increase materialism.

People in poor marriages probably engage in more compensatory consumption, turning to money and stuff to provide the fulfiment they don’t get from their relationship. I’ve known many women who’ve diverted all their desires into revamping a kitchen or restoring a barn only to discover it was actually their marriage that desperately needed renovation. If only they’d gone to Relate instead of Ikea, they could have saved a fortune and stocked up on happiness instead of granite work-tops.

What more could we possibly want darling?

In the US study 20% of marriages comprised couples who were both materialistic and admitted that money was very important to them. These couples were also better off financially, but their relationships were in a sorry state. Again, there are a multitude of reasons for this. It's easy to imagine the passion-killing effects of over-working to earn more, spending time investing in material things and not in the relationship, and a desperate need to ‘prove’ something to people because of poor self-esteem. 

No-one is saying that poverty makes people happier. Just that money makes poor marriage cement, as this ad in Private Eye years ago demonstrated:

"Spike Milligan would like to meet a rich, well-insured widow - intention: murder,"

Perhaps Spike knew that a relationship based on money wouldn’t work. Not sure we'd recommend his alternative though!

*Jason S. Carroll, Lukas R. Dean, Lindsey L. Call, Dean M. Busby. Materialism and Marriage: Couple Profiles of Congruent and Incongruent Spouses. Journal of Couple & Relationship Therapy, 2011; 10 (4): 287 DOI:10.1080/15332691.2011.613306

New money advice service launched

Are you one of the many women who, when it  comes to asking for advice about money, has no idea where to go? The friendly bank manager is now a distant memory and even friends you trust can offer nothing but financial horror stories.

Or perhaps you’re scared about approaching organisations who offer ‘advice’ for fear you’ll get sold something you don’t want, or get charged for advice?

We’d like to allay those worries and point you to a safe pair of hands.

The Money Advice Service.

It’s the government advice service (formally the Consumer Financial Education Body) launched today that really does offer free, impartial money advice. 

We think it's a friendly site that's easy to browse without getting tripped up by horrid jargon. Perhaps it's the green colour scheme and homely images that makes it particularly relaxing and non-threatening? And there are free printed guides on offer, as well as face-to-face services and a free helpline (0300 500 5000).

A big plus is that it's very female friendly, with great sections on childcare, finance for parents, and help with those less-than-happy events like divorce and redundancy.

We particularly like the way they acknowledge that seeking financial advice isn't just a fact-finding exercise, and that money induces a lot of anxiety in people. There's a section headed 'Money Worries' especially for those wobbly times.

Check out www.moneyadviceservice.org.uk

Guest post from Sarah Pennells

We're thrilled to have this guest post from top financial journalist Sarah Pennells. Sarah has a fabulous finance website www.savvywoman.co.uk and gives us her expert views on managing money here:

I’ll let you into a secret: I wasn’t born with a ‘money gene’ and I didn’t find money inherently fascinating at a young age. In fact, I wasn’t really interested in finance until I started working for a programme called Moneybox on Radio 4. Previously, I used to avoid programmes about money and bin the personal finance sections of the papers (sacrilege, I know!). 

But something clicked when I saw for myself how financial companies behaved and discovered the far reaching consequences of a particular course of action.

It amazed me then – and still does – that financial companies would happily give their customers the brush off but would often move heaven and earth to offer speedy compensation once a journalist was on the trail. Unearthing big financial scams and stories was undoubtedly rewarding, but so was giving people information that would help them to make better decisions about their own financial situation.

Over the last few years there’s no doubt that life – certainly in terms of the financial choices we face - has become much more complicated.  I almost ran out of fingers recently when I was trying to keep track of the various government announcements about pensions!  And – like many areas of finance – the changes to state and workplace pensions will affect women and men differently. 

So, this leads rather neatly onto why I started my finance website for women called SavvyWoman.co.uk. Apart from sites such as Sheconomics there really hasn’t been that much information about money that’s aimed at women.  Sure, you’d get a smattering of articles about subjects such as women’s shopping habits or childcare costs (especially if there was a change in the rules), but there was – and is - very little that acknowledges that women and men can have different ideas about money.

We often have to make different financial choices – either because we earn less than men, because we have career breaks to bring up children or because we take on a caring role. But even if we start from the same point we may not follow the same path. One example is that women may have a different way of assessing risk in relation to investments and can be more cautious about what we do with our money.  Research shows we tend to be more put off by financial jargon than men are. 

It’s not that men particularly like jargon but it seems that they accept it as something that goes with the territory. 

However, although we may not know our allocation rate from our exit fee, we’re perfectly capable of getting to grip with our finances and making good money decisions. 

But some of us (men as well as women) have convinced ourselves that we don’t need to worry about money or that that it’s simply too dull to think about.

From where I’m standing, it’s too important to ignore. While I don’t actually believe that having pots of money is a sure fire route to happiness, knowing how to make sound financial decisions can certainly help.

Thanks, Sarah. 

Don't forget to visit her site for lots of tips and information.

Time for a financial health check?

What does being healthy mean to you?

A daily grind at the gym? An organic diet based on superfoods? 
Remembering to take multivitamins and meditate?

What about your financial health?

Money may be boring but it’s a fact that your psychological wellbeing is closely linked to your financial security. People who are in debt are more likely to suffer from anxiety and depression. Around 3.8 million people in the UK say money worries have kept them off work. When our finances are in good shape, we feel in control of our lives.

Give your finances a quick health-check by answering the following questions:

1. Do you have enough savings to cover at least 3 month’s expenses?
2. Do you pay off your credit card bill in full every month?
3. Have you got a pension?
4. Do you avoid shopping when you’re stressed, miserable or just plain bored?
5. Do you find it easy to talk about (or ask for) money?
6. Do you know how much you spent last month and what on?
7. Do you have a good understanding of the money world?

How did you do?

Seven Yes’s and you’re doing brilliantly.

Less than seven isn’t so good and suggests you might not be in the full bloom of financial health. But you can do somehting about it.

Here are a four steps to take now to bring your finances back to fitness:

• Save automatically. Sweep an amount every month straight into a savings account. You won’t miss what you didn’t have and you’ll have a back-up fund in case of emergencies. OK, interest rates aren’t great at the moment but simply labelling a pot of money ‘savings’ will make it psychologically harder for you to squander it. If your mortgage goes down or you get a pay rise, divert the amount and carry on as if you hadn’t had it.
• Sort out you pension now. It is estimated that 70% of working women in the UK won’t have enough to live on when they retire. If your employer runs a pension scheme, opt into it. Every day you’re not in it you’re turning down free money. If you’re not employed or your company doesn’t run a scheme, get independent advice on how you can start your own pension. It needn’t cost the earth but the earlier you start the bigger the payout.
• Be aware. Face up to debts. Stop hiding statements and start scrutinising them. Know where your money goes. Track your spending for a month. Note down any emotional spending triggers, so you know the danger signs. We have free worksheets you can download from our website.
• Wise up. Browse financial websites, peek at the financial pages of the newspaper or just ask someone to explain the basics to you. It’s not rocket science and there are some very accessible sites out there.We have tons of links and resouces to help you on our website.

 Add financial health to all the other health-giving activities that put a spring in your step and make you feel in tip-top shape. Then you can get on with enjoying life today knowing that tomorrow’s taken care of.