Overspending is caused by a number of factors. No matter how good your intentions and how motivated you are, something just forces you to spend a little (or a lot) more than your allotted budget. From emotion to upbringing, here are the top reasons why you tend to overspend and what you can to do to fix them.
You take retail therapy too far.
Do you make purchases every time you’re bored, sad, or stressed out? If so, then you’re an emotional spender. You’re easily swayed by your moods leading you to buy things you don’t need. You seek comfort in material things which is why your budget is suffering whenever waves of emotion rush over you. It’s okay to buy a few things when you’re feeling good or feeling down, as long as you can afford them and you stay within your budget. Too often and too much spending is always bad.
What to do: The next time you’re about to do an emotional impulse buy, stop dead on your tracks. Assuming you can afford the object of your desire, wait 48 hours before finally deciding to buy it. This way, you have ample time to debate with yourself whether your next purchase is a want or a need and to see if the purchase is emotionally motivated.
Suppose you didn’t have much growing up. Now that you’re making money for yourself, you believe it’s time you got a taste of all the luxuries you were deprived during your younger years. Now that you can afford it, you take advantage of experiencing all the best things in life. Treating yourself with nice things is well and good but you might be spoiling yourself.
What to do: Sure, you want to taste the best things life has to offer but is your lifestyle bordering on lavish? More importantly, is it sustainable? Know when and how to distinguish earned reward and needless excess. Keep in mind that if you don’t properly manage your finances, you and your future family might be forced to go back to that deprived economic state you eagerly wanted to leave behind.
Your lifestyle is catching up with your income.
Say you got a big promotion and an even bigger raise. You’d probably think it’s time for a more posh place, a new car, and a new phone. You can finally afford going abroad for the holidays. Because of your raise, you can also afford going to classy restaurants for dinner every night. You believe it’s time you expanded your lifestyle to accommodate a man/woman of your stature.
What to do: You got a promotion and a raise. You didn’t win the lottery. Don’t upgrade your lifestyle just because you got a few thousands added to your income. Instead, use the additional income to invest and grow your money. If you act like a millionaire each time something good happens at work, soon you’ll get used to luxuries that you can’t afford in the long run. Don’t just rely on your income. What if, heaven forbid, you lose your job? What will you do then? Don’t play catch up with your income. Trim your spending to necessities and investments.
Are you a self-confessed overspender? What makes you think so? Share your experience with us in the comments.