This is Why You Overspend!

This is Why You OverspendOverspending is something that most all of us have been guilty of at one time or another.  But when you overspend on a regular basis, it can put a real dent in the amount of money you have to spend on the things you need, not just the things you want.

If you’re someone that tends to overspend often and then discover you’ve made a bit of a mess financially, it’s probably wise to start doing a little digging and try to discover just why the overspending is happening in the first place.

Know Why Overspending Happens

When you know why it’s happening, then you can take steps to address those “whys” and prevent the overspending before it happens, saving you a TON of money.

There can literally be dozens of reasons why some of us tend to spend more than we make (or more than we should).  But I think there are five top reasons why it happens.  Do you recognize any of these in your own life?

  • Using Credit Cards-  When you use credit to buy stuff, you are losing money, period.  You pay extra for that stuff in the form of interest, fees, etc. that eats away at your money, costing you sometimes more than double the purchase price of the item over the long term.  Even if you pay off your balance every month you still tend to spend 12% more  just because credit is so easy and frictionless to use.  It doesn’t feel like real money when you spend it, so it’s easy to let your guard down and spend more than you intended.
  • You Don’t Have a Plan-  Do you spend your money according to a written budget?  It’s an excellent idea that helps you to be disciplined about how you spend.  If you don’t have a plan (a budget) in place for how to spend your money, you really have no idea if you’re overspending or not, you just have a general idea.  When you have a written budget, you actually plan your spending before it happens.  When you stick to that plan you won’t overspend.
  • Shopping Without a List-  This goes along with budgeting.  When you make a list of what you plan to buy before you go shopping, then it’s easier to stay focused and not be mesmerized by the siren’s call of the “Clearance Sale” sign.  When you make a list before you shop, when you are thinking more clearly, you’re not distracted by marketing techniques that can influence you inside the store.  Stick to the list and everything will be cool.
  • You’re a Sucker for Sales-  If you don’t have a plan (budget, shopping list) it’s easy to load up on stuff you don’t really need just because it’s on sale, thus you spend too much.  When you go shopping without a plan, the marketing experts WILL separate you from your money.  They know how you respond psychologically and they know how to get you emotionally involved in the sale.  Don’t be a sucker!
  • You Spend Emotionally-  Read #4 again.  When they get you emotionally involved, you will spend money much more easily.  Don’t go shopping to cheer yourself up or because you’re sad, depressed, stressed, or in any other extreme emotional state.  Shopping is not therapy!  Buying stuff may make you feel better for a few minutes or even a few hours, but the long term implications to “shopping therapy” on your money situation can leave you broke and more depressed or angry than you were in the first place, and cause you to need real therapy.  So be careful.  No emotional shopping!

Overspending is usually a result of a lack of discipline, knowledge, or both when it comes to money.  So to prevent the problems that come along with spending more than you make, the two best things you can do are get educated about how to use money wisely, and make a consistent plan for your money before you spend it.

When you start doing those things, you WILL succeed with money!

About Dr. Jason Cabler

8 Responses to “This is Why You Overspend!”

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  1. So much for shopping when I’m a little down or bored…I enjoyed the endorphins that are released as I pick out my favorite fashion trends. 🙂 You make an excellent point, shopping shouldn’t be done as a way to deal with your emotions. It will lead you to overspending and broke. You have valid points in this post!

  2. Much like a drug addiction, those endorphins can feel good in the moment, but there can be consequences later . The best way to deal with emotional situations is by actually dealing with them instead of deflecting them with something else.

    Thanks for the comment Ornella!

  3. Kathy says:

    So true! Many times I have regretted purchases made when ‘buying’ myself out of feeling depressed or down. I would love to go to the mall and buy, buy buy!

    Now, I can’t stand to shop and only do it when it’s absolutely necessary.

    • It can feel really good when you’re doing it, but when you realize you’ve spent too much and/or the credit card bill arrives, it can depress you again causing you to want to go out and shop to feel good again. It’s a bad spiral to get into.

  4. Kathy says:

    Even with a budget (plan), if shopping & using credit cards, it is SO easy to fall victim to the sales. At lest for me, it is. Using cash + a list = greater savings.

  5. John says:

    Great thoughts here. I totally agree with you that credit cards aren’t the way to go. People get stuck in spending more than they earn, and for it, they get to pay the banks more interest than they originally intended. Thanks for the article! 🙂

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