Today’s Financial Message Just for you, {{ first name | friend}}
Every dollar is a choice.
Overspending doesn't define you. It's a pattern, and patterns can be broken.
It begins with one conscious decision: to pause before you purchase, to ask "does this serve my future or just my present?"
The road to financial freedom isn't paved with perfection — it's built on small, consistent wins.… Continue Reading
30% of overspenders feel financially pressured to keep up with other people.*
Nearly 40% of Americans surveyed by LendingTree* admitted to overspending to impress others, wanting to feel successful, to impact a date or to return generosity.
27% of those folks were already in debt.
77% of those overspenders also said they regretted it.
Almost 30% said they feel financially pressured to keep up with family and friends
Sound familiar? All of us have overspent on something - but if it’s becoming more of a habit, what can you do about it?
In this article, we will go over:
The main reasons for overspending
Common examples
How to stop
📰Article📰
Why Do We Overspend?
The reasons for this overlap with different emotions in several ways.
Power and control over your life are common motivators for many behaviors.
Not spending because you can’t afford to spend may create a feeling of powerlessness. If you’re used to having the freedom and power to spend when you feel like it, refraining from spending can bring up stronger negative emotions.
Feelings of sadness may be alleviated by spending in some cases.
In these cases, sadness may be a trigger to spend, even when it’s beyond your budget. Sadness is the trigger in this case, and spending is the coping mechanism. (It’s also a dopamine hit.)
In these ways, the psychology of overspending is similar to many other vices.
You have a trigger, a negative emotion.
The way you alleviate that negative emotion is to engage in the negative behavior that leads to overcoming it.
In many cases, people alleviate negative emotional triggers with a “path of least resistance”. This is true of over-eating, some drinking behaviors, and many other simple paths to emotional release.
Like many vices, overspending is a very easy behavior to engage in.
It’s very easy to swipe a credit card or pull some thin papers out of your wallet. But like many other vices, the damage from doing so will come later and may start to snowball if the negative action continues over the long term.
“What’s the most common form of overspending?”
Credit card spending is likely to be the most common contributor to overspending.
When it comes to expenses that are necessary, like home bills, mortgage, food, and others, credit cards are one of the most common payment methods.
Naturally, it’s difficult to study the question of credit card debt as a part of overspending habits. But credit card debt is a major contributor to overall consumer debt.
When it comes to reasons for overspending, there are a few major ones:
Peer pressure, such as joining peers in spending
Boredom, where spending money provides the easiest path to alleviating it
Compulsive buying, perhaps as a result of crafty advertising or simply seeing something you like
Special occasions where you lose control and splurge
🧠Go Deeper🧠
💸 The Wealthy Thinker: Emotional Spending? 4 Ways to Stop & How to Help Someone Who Does it
💸 The Wealthy Thinker: Living with an Overspender: 7 Solid Strategies to Manage Stress
4 Ways to Stop Overspending
It’s not going to happen in a day - take it step by step.
1. Identify your triggers.
What are you thinking about when you overspend?
Some common triggers include:
Feeling sad about something
Wanting to feel more in control of your life
Being under the influence of alcohol or drugs
Feeling peer pressure when you're around others (not wanting to look cheap or poor)
Feeling too excited; excitement triggers
Nailing down the why is a critical first step.
2. Avoid the triggers.
A good example of this would be leaving credit cards at home, except in cases where you have a specific use for them.
Whenever you identify a trigger, take steps to avoid it or counter it with another action.
For example, if you feel like spending when you feel down or bored, try to replace that feeling with something else - play a game on your phone, go for a walk, take a drive, call a friend, etc.
3. Find a budget that can keep you motivated.
Create a “needs vs wants” budget and set strict rules for both types of spending.
If you still want the thing, maybe you reward yourself with a small purchase once you start racking up wins, instead of just buying without really thinking it through.
4. Practice shopping smarter.
You don’t need to stop impulse buying entirely!
Instead, you can fit it into your life in smarter ways - even giving yourself a certain amount every month to play with.
The Bottom Line
Overspending is common. According to many reports, the average American overspends by thousands per year. When asked, almost 40% of Americans admit to overspending to impress others.
Identifying the reasons why you overspend with honesty and self-reflection can set you on the path to reining it in.
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