Overspending happens quite often. For whatever reason, some people lack the discipline to manage their money wisely and practice patience. The need for instant gratification overwhelms any desire to be thrifty. Whatever it is they want, they want it now. Unfortunately, overspending can lead to debt accumulation and difficulty paying bills on time. To avoid overspending, you must be aware of the causes that lead to it. Let’s take a look at a few.
No budget, big problem
Living on a budget helps to organize your financial life. Living without a budget will lead to overspending. With no restraint, you will use your money whenever you see fit. Your spending habits will be atrocious and you’ll wait anxiously for the next payday. Occasionally, you may wonder how you will take care of your expenses and suffer from buyer’s remorse.
Irresponsible use of credit
Credit cards can be the bane of your financial livelihood. Used responsibly, they can help you get out of some financial binds. The fact is, however, most people fail to use credit cards responsibly. Instead, people choose to use credit cards to purchase items they want immediately, but don’t really need and can’t really afford. Before they realize it, they have maxed out their credit card. Some people stop at this point and focus on paying down the debt. Others simply try to make the minimum payments. They may further compound the effect by acquiring a new credit card. Either way, they are putting a strain on their income, adding new debt to current expenses.
Irresponsible use of cash
With debit cards and ATMs, you have a variety of easy ways to access your cash. Debit cards are used to purchase everything, ranging from gasoline to a pack of gum. Most people use their debit card without giving it, or their bank accounts, a second thought. It has become easy to swipe and keep going. The problem lies in the fact that most people use debit cards, but don’t account for each and every transaction they make. That extra step made popular by check users is all but eliminated with debit card use. And unless you check your bank account balance daily, you will have to wait until you receive the bank statement to reconcile.
ATMs are practically everywhere. If you need cash and can’t use your debit card, then you can just go to the nearest ATM and withdraw money. No purchase has to be forgone with easy access to your cash. Unfortunately, you may have to give up some money to get your cash in hand. Your bank’s ATM may not be close, but surely some bank’s ATM is available. All you have to do is pay the surcharge fees to use it. Do this several times a month and those fees quickly add up.
Spending can have an effect on you emotionally. The idea of having something new can send you into a euphoric state, if only for a moment. When that fleeting moment passes, then it’s off to the store to satisfy the need again. Tending to your emotions through spending will seriously deplete your income, taking away funds meant to cover more important expenses or to be saved. Keep this up and you’ll have plenty of stuff, but nowhere to put it.
Keeping up with the “Joneses”
Severe overspending happens when you try to keep up with friends, family, and neighbors. Making purchases simply because you want to be a part of the “in” crowd will leave you in financial peril. Overspending to impress others makes no sense, especially if those you’re trying to keep pace with have more financial resources than you. You can try living beyond your means and struggle or choose to live within your means and be financially stress-free.
No good comes from overspending. It is simply proof of a lack of financial discipline. Being aware of the causes leading to overspending is a step in the direction of good money management. Creating a budget and sticking to it will help you keep your spending within the limits of your income. Over time, you will begin to save as much as you overspent. Soon, everyone will be trying to keep up with you.