It’s a common scenario. We walk into a store to get one simple thing, and end up leaving with two bags bulging full of whatever caught our fancy. And we do this many times over.
Overspending is the number one reason people get into financial mess. In the case of compulsive overspending, the problem is not that a person lacks self-control. Rather, they usually have an unmet basic need — which they are subconsciously addressing through overspending.
Overspending is not rooted in money. Money is simple and easy to understand. Human psychology is more complex.
To avoid overspending there must be plan. A budget that must be followed. Spending must be tracked by writing down every expenditure. End of the day, an audit and self – reflection will go a long way to identify where money was spent
Whenever you feel the urge to overspend, stop and ask yourself whether you are addressing a need or a want?
The path to financial health is not to reduce life to the bare minimum in order to save the absolute maximum. Instead, it’s to take an honest look at needs and meet them with long-term solutions. If the problem is burnout, invest in rest and relaxation. Instead of spending on things that numbs, consider taking time to rest and recreation.
If your problem is low self-worth, invest strategically in things that will make you feel worthy. There are many ways you can do this without money.
There are definite long-term costs to overspending. For instance, when you overspend, you are wasting money that you could otherwise deposit into savings accounts or other investment vehicles. That becomes money that never has a chance to grow from compound interest.
Think, too, about how much better it’d be to take that extra money you spent on movies and dining out toward paying down your car loan or credit card debt. Moreover, if overspending forces you to put other purchases on your credit cards? Now all those extra iced coffees are adding to your high-interest rate debt.
If your household budget is continually breaking, maybe it is time to take a closer look at your discretionary spending.