Do you ever look at your checking account statement and wonder where all the money went? Or maybe you constantly find that there’s more month left over than money? If this sounds familiar, your biggest challenge might be to figure out how you could stop overspending so that you would have money left over at the end of the month. There are probably numerous reasons why you overspend. If you want to stop it, you need to understand what triggers that overspending and then consciously confront them whenever you’re tempted to give in. Beyond this, there are some deep-seated reasons why you might be doing this. Here are seven very common reasons that underlie the cause for over spending and how you could overcome them.
You’re attempting to keep up appearances
Stop and ask yourself if you’re trying to maintain an image to meet the presumed expectations of other people. The real irony here is that if you’re trying to “keep up with the Joneses,” the Joneses are probably trying to keep up with you. This means you’re both perpetuating a cycle of overspending. The way to change this is by focusing on your goals and not on your neighbors. Sit down and spend some time thinking about what’s really important to you – what you really want to have in your life. When you identify your goals, always keep them in front of you. This will help you get there.
You rely on credit cards
There’s just something much easier about pulling out a credit card and using it to pay for something. It just doesn’t feel the same as using cash. However, when you carry a bunch of credit cards, it just makes it very easy to overspend. Here’s a brief video that explains more about this tendency.
Fortunately there is an easy fix for this. Try to use cash for a month or at least a week. Go to your bank’s ATM on Sunday, take out enough cash to last you through the week and then put it into an envelope and use the envelope as your ATM. Do this for a week and you will have a much better sense of how much you’re spending every day and what’s really worth the money.
Your budget doesn’t match your lifestyle
When you’re living a certain lifestyle and then run into a financial emergency or hardship, you may find it difficult to give up that lifestyle or to even cut back. The problem is that we tend to expect our lifestyle and our earnings to improve continually throughout our lives. But this is often not the case. Earnings and expenses can fluctuate as does the economy. The answer here is trying to consistently live below your means during both good and bad times. You should have at least six months of living expenses set aside in savings so that you will have a cushion if your expenses suddenly increase or if you run into an emergency.
You had a deprived childhood
You may have grown up poor so that you feel the need to compensate for the fact that you were deprived as a child. And if you grew up in an affluent family you might feel that you need to spend money to maintain that lifestyle even when you don’t have enough income to support it. What’s the fix? If you didn’t have good financial role models when you were a child, seek them out now. You really don’t need to do much more than go to your local bookstore or library to find inspiring and instructive books that could help you do a better job of managing your money.
Trying to fill an emotional void
One of the problems with spending is that you can control it while you can’t control many of the other things in your life. If you’re feeling unhappy or if other parts of your life seem out of control, you’re likely to go into overspending mode. How can you fix this? Don’t let shopping be a temporary distraction. Deal with your feelings. Look for a long-term solution that will give you relief. Maybe it’s putting that “retail therapy” money into real therapy. Or you might try dealing directly with the situation that caused you to have bad feelings in the first place.
You have no clearly defined goals
It’s much easier to give in to the temptation to spend money if you don’t have clear short, mid- and long-term goals. You should find it easier to curb overspending when you have goals and see what it will take to reach them. You need to start prioritizing and visualizing your goals. Write them down and then think about how you will feel when you reach them.
Researchers have found that it makes most of us happy to spend money on other people. But there’s a difference between surprising a friend with a small gift and over indulging those we love. Whether it’s your child’s unending requests for a treat or a toy or your husband’s desire for a new HDTV, it can be tough to say no. One way to fix the problem with your kids is to give them an allowance. When they next ask for a toy or a treat, just give them the option of using their own allowance money. If they have to use their own money, they will learn a better appreciation of how much things really cost. Beyond this, you might take the time to create financial priorities with your spouse or partner so you are both aware of where your money is going. And you might want to budget a little extra money each month for indulgences – to permit a few spontaneous purchases.