You’ve been in a situation like this before. Maybe you start your day with one too many coffees from the place next to your office, or you walk into the grocery store only expecting to buy bread just to end up with a cart full of unexpected purchases. Overspending isn’t the end of the world, but when you do it often enough, it can become a real financial problem.
If you’re an over spender, you’re not alone. According to NerdWallet, over 64% of Americans have credit card debt or have had credit card debt in the past. Why do some people constantly find themselves overspending while some are naturally born savers? The actual causes of overspending highlight that these problems run deeper than we think. Let’s pinpoint the 5 main reasons for overspending and actionable ways to stop these habits from taking over your bank account
1. Impulse Shopping
As much as we might hate to admit it, we’re emotional creatures. Our purchases are based on emotions and how we feel at the moment. This is why overspenders are so prone to impulse shopping. It’s not your fault. Retail stores and even e-commerce businesses build their storefronts and marketing platforms with this in mind. They know you’re prone to shopping with your emotions leading the way, and they manipulate these feelings so you’ll hand over your hard earned cash.
How do you stop impulse shopping for good? The answer is simpler than you think. Make a plan, and actually, stick to it. Write down not only what you’re planning to buy but how much you have to spend. To take things a step further, bring cash and only cash, so you aren’t able to veer from the plan.
2. “Little” Expenses
You know how much you pay for rent each much and how much you spend, on average, for electric, but do you know how much your daily coffees are adding up? What about your weekend trips to the city? These small things seem insignificant at the moment, but they quickly do damage to your bank account.
It’s hard to change these habits if you don’t notice them adding up in real-time. Download a money tracking app to your phone like Mint which tallies up your expenses by category. This will show you exactly where your money is going every month. You’ll be surprised at just how much you were spending.
3. Social Pressure
There’s a lot of pressure to have the nicest things, the latest gadget, and the most expensive trips. These things are rewarding for a moment, but they lack real value. With the rise of social media, there’s even more pressure to keep up with everyone else. How does your coworker afford such nice handbags? How does your neighbor have the best car on the block when you pay the same rent? These questions are damaging not only to your mental health but to your wallet.
Remind yourself the next time you’re scrolling on social media that this is only one side of the story. Sure, your friend from high school might be posting a picture of her new house, but you don’t know if you don’t also struggle with debt or a high mortgage rate. Talk with trusted friends and family about your money goals and keep each other accountable. Once you learn to value experiences and relationships, everything else seems less important.
4. Limited Savings
When was the last time you checked in with your emergency fund if you have one at all? Your emergency savings isn’t for Christmas gifts or buying yourself a nice pair of shoes when you finally have enough for the pair you’ve been eyeing at the mall. This fund is only for unexpected expenses. If you lose your job or your car breaks down, for instance, that’s when you tap into your fund.
Without an emergency savings fund, you’re left reaching for a loan or your credit card the next time something happens. You can’t afford to save when it’s impossible to prepare for things like car accidents or the loss of a job. Financial disasters don’t wait for you, so you have to always be prepared.
To build your savings plan, try to allocate around 10% of your take-home pay into a savings account each month. Keep this savings hard to access, and don’t link it to any debit cards. Slowly but surely that number will rise, and you’ll feel far more confident about your financial wellness.
5. Treat Yourself Mindset
The treat yourself mindset has been around since long before the famous Parks and Rec episode. You work hard every day, so shouldn’t you deserve special things every once in a while? The idea that you deserve to buy something for yourself simply because you’ve “earned it” or it’s “just this once” is a dead-end street. It never is “just this once” and you never really feel better after treating yourself.
The only way to break this habit is to distance “treats” and “wellness” from consumerism. Marketing ploys want you to believe that the only way to care for yourself is buying the most expensive things in the moment. You know deep down this isn’t true. Look for new ways to reward yourself after a long day that doesn’t break the bank. Maybe you’ll cook a meal with a loved one, or you’ll take a warm bubble bath. These are activities that are just as rewarding, but they don’t derail your spending.
Financial Wellness and Overspending
If you want a secure economic future, you need to learn to stop overspending today. It’s harder than ever when we are always plagued by the newest and greatest products around every corner. It’s hard to escape when it seems like everyone else is buying so many things or doing so much. Realize that life is what you make it, and it’s up to you to value the more important things.
Are you falling victim to overspending? Your wallet might want you to look closely at yourself to see if any of these causes above apply to you. It’s never too late to make a change when it comes to your financial future.
