5 reasons for overspending
Whenever we spend more than our income, we are overspending. For some of us, overspending can be almost unconscious—you buy that latte and new sweatshirt and then go out to dinner without adding up the costs in your head, much less on paper. We're not even aware of the hole we've dug ourselves into until it's too late. But in order to meet our financial goals, we need to live within our means.
Following are five common reasons people overspend—if you recognize any of these, see if you can weed that behavior out of your financial life.
1. Peer pressure. Many students feel pressured by college friends to spend money they don’t have. Perhaps your friends want to go grab dinner, see a movie, or buy tickets for a concert. You want to go, but you don't have the money. It's hard to say, “No, I can't afford to do that.” Many students don't have much money, but sometimes they are unwilling to admit it. If you can be honest and live within your means, you'll not only prevent yourself from financial troubles, but you also may find that you've helped others have the courage to make better financial choices for themselves.
2. Want to feel good NOW. Your life is full of stress, obligations, demands, schedules, assignments, and papers that are due. Sometimes you just want a break. You want a reward, so you buy some new clothes or a new video game. You might feel better for a while—until you get the bill. Not having money when the bill comes is an even bigger stressor and the cycle starts again. Better to reward yourself with treats you can afford than to get on a treadmill of overspending.
3. Don't have, or ignore, financial goals. If you've never set financial goals for yourself, you may not have considered the benefits of saving or investing for tomorrow. That makes it easier to spend money now, even though every spending decision you make today will affect the quality of your future financial health. If you want to see how to set financial goals, visit Setting Financial Goals on this Web site.
4. Keep up with neighbors and friends. Your buddy has a flat screen TV? Your friend has the latest designer clothes? We often think we should be able to have everything our friends have, but many times we can't. Some will always have more than others, so keeping up with the consumerism of your neighbors can be an empty path. Many new technologies get cheaper with time, and many new styles are fads that pass quickly. While we all need rewards and treats once in a while, you'll find a lot more joy in paying for what you can afford than stressing about your upcoming credit card bill.
5. Addictive spending. Just as people become addicted to gambling, alcohol, or the Internet, a person can become addicted to the emotional high of spending. If you find that you are having problems with spending and debt—if you feel like you can't control your spending, or how to spend money occupies a lot of your thinking—get help. Debtors Anonymous is a 12-step program for debtors trying to recover from money problems and compulsive debt. Your life is worth far more than anything you want to buy.
If you want to figure out how much you are spending, you can use the online financial calculator "How Much Am I Spending?"
Access the Budget Wizard here