Money Problems? Blame the Internet

There is plenty of blame to go around when it comes to our country's recent economic malaise -- from insufficient financial regulation to nearsightedness and false assumptions on the part of lawmakers, investors and consumers ... to plain old greed.

Now, however, a new article in Psychology Today suggests one other factor at play: the Internet.

Author and psychiatrist Elias Aboujaoude, M.D., writes that the Web can promote destructive behaviors that lead to financial recklessness -- at least for some people. Here's an excerpt from his article; I bolded a few of personality traits he emphasizes:

Online, we take on new character traits that add up to a full-fledged "e-personality" -- a disinhibited way of behaving and transacting that can be very different from how we have always operated. E-personality traits found in our online alter egos include grandiosity, or the sense that sky is the limit when it comes to what we can accomplish; narcissism, or how we tend to think of ourselves as the center of the World Wide Web; and impulsivity, or the urge-driven lifestyle many of us are falling into. As a consequence of adopting these traits, we feel more potent, special, and spontaneous. When it comes to online spending, the effects become less near and concrete. Fueled by grandiose, narcissistic, and impulsive notions, it is easier online to feel as special, deserving, and immune to bankruptcy as a Marie Antoinette -- and to shop accordingly.

One could very well argue the opposite -- that the web has, in fact, made us more connected to our finances, thanks to online banking and budgeting tools. It's also helped increase market transparency, thanks to a growing number of comparison-shopping web sites pointing us towards the best loans, credit cards, clothing, airfare, you name it.

Still, I agree with Dr. Aboujaoude's perspective that spending has become more abstract -- and I could see that that by managing and spending money solely on the Web, we could in some ways start to feel less connected with our finances. He writes that with so many of our financial transactions conducted online, "it no longer feels like spending. And so we spend more."

So how can we ensure that we don't fall prey to the web's disconnect? Here are 5 tips to help you get a better handle on your money:

1. Use Cash
I'll say it yet again: Using cash can help you stay better connected with your finances and keep more money in your wallet. Using your senses of touch and sight can protect you from making impulse purchases -- because, as behavioral experts say, there's a psychological "pain" associated parting with cold, hard cash. You exert more self control this way, as opposed to using a credit card (whether online or offline).

2. Keep a Spending Diary
One reason why money is so intangible and hard to comprehend is because it's not really part of our daily routine. Until you get very hands-on with you money -- tracking spending, analyzing where your money goes, setting values and expectations -- you're stuck. Mint and Quicken are great online budgeting tools, but sometimes you just need to jot down your spending behavior using a pen and paper. Personally, if I want to remember something, I need to write it down. It sticks in my brain far more easily than if, say, I typed it into my phone or read it online somewhere.

If you really want to get a handle on spending, keep a journal or log with you to track all your day's purchases and spending totals. It's old-fashioned, but it makes your relationship with money more intimate -- and that's a good thing.

3. Carry a Calculator
How many times do you just go to the store, pick up what you need and only at the cash register learn the total dollar amount of what you bought? Your answer shouldn't be "all the time." Your phone's calculator can easily help you manage the pace of your spending at the grocery store or mall -- and again, watching the numbers add up will makes the money about to leave your wallet (or your bank account) seem far more real.

4. Talk About Money
The Internet can be a lonely place -- and if you're keeping all of your financial inquiries and communications online, you may be missing out. The more you discuss money and share your financial experiences with the people close to you, the more real your money will become -- and, frankly, the more help you and your friends and family can exchange. And visit your bank branch once in a while, asking questions of a loan officer or bank rep. That's what they are there for!

5. Make a Daily Connection

Get used to checking your bank balance regularly -- even daily, just as you might step on your scale, make pot of coffee or check the weather each morning. Make it a habit. For this, of course, you may need to hop online, but no worries. It's for a good cause!

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