Trading cash for the item you’ve been laying your eyes on during the past few days feels gratifying especially if they’re fruits of your monthly labor. Spending can be a form of celebration; a way of acknowledging all your hard work that has been paid off. However, just like liquor in celebrations, spending should be taken in moderation. Overspending is an activity that negatively affects not only the person’s credit file and reputation, but they way he looks at life and his self-worth.
There are a lot of reasons why people spend too much. Some overspend to grab opportunities, to seek popularity and attention, to escape from the cruel reality, and to please other people. If you’re guilty of overspending, try to take a look at the types of bad spenders listed below and learn how to address your issues.
1. The Bargain Magnet
Have you ever noticed how come sales and huge discounts on shopping malls always take place during paydays? Or when people have plenty of money in their pockets, like during the Christmas season? Well, it’s nothing but a marketing strategy for businesses to increase their profit.
As a consumer who just happens to pass by these establishments, you tend to get easily blinded by the shiny, discounted items you don’t even need, like a pair of shoes that are now half the price or a buy one take one leather bag that seems obviously worn out.
Do you find it difficult to turn away from a deal even if you don’t need the item on sale? If you’re guilty of having an obsession with neon tags, there are two practical ways to solve your problem. First is to list down your priorities. Separate the “necessities” from “desires.” The second way is very basic – if you have nothing to buy, keep yourself away from shopping centers.
2. The Feel-Good Spender
A large number of guilty shopaholics fall under this category. The reason why you overspend is not that you need or want the item but because you seek pleasure from the shopping experience itself. You shop to feel good and escape from boredom or anxiety. The result is a large pile of unnecessary items that gather dust inside your cabinet. Some even have their price tags still attached to them.
The first step in solving this matter is awareness. You have to know the severity of the condition since this is often linked to a serious psychological disorder called Compulsive Buying Disorder (CBD) that requires cognitive behavioral therapy. The symptoms include over-preoccupation with buying, distress as a result of the activity and having hypomanic episodes.
3. The Status Seeker
A spender with the “keeping up with the Joneses” mentality is someone who measures his/her self-worth by the quantity or price of his/her possessions and experiences, and by his/her capability to keep up with the trend. They buy expensive wrist watches, branded shoes and clothes, pieces of jewelry, and even shiny cars (they don’t need) that look good on their driveway. They stay at overpriced hotels. They give extravagant gifts. They splurge on fancy home furniture, all for the sake of impressing other people.
In reality, some of them use credit cards and file a variety of borrowing means like quick cash loans to sustain their luxurious living. When nobody’s looking, they tend to ask themselves how they’d be able to address their financial ruins. Pride, envy, and greed – these are three of the negative attributes everyone has to remove from their system.
4. The Peer-Pressured
Okay, let’s say you’re not really a status seeker who overspends for popularity or recognition. You might only be pressured to join your wealthy group of friends for a boy’s night out with a few coins in your pocket. You tend to use your cards, making you go over your current budget just to please them.
Keep it real, dude. Indulging yourself through partying hard or shopping with your friends every once in a while is not bad, but when you find yourself ironically struggling to have fun, then it’s time to change your ways. If they are true friends, they won’t force you to spend that much and respect your decision about budget limits.
5. The Financially Illiterate
People who have no clear idea of managing their financial assets tend to overspend and get broke. You earn, spend, run out of money, earn again, and this goes on like a cycle without considering the value of money that goes in and out.
There’s a bank whose tagline goes like this: “When you change the way you think about money, you can get the best out of life.” The key is to be aware of the value of money on the palm of your hands and using the amount, whether big or small, to your advantage. Educate yourself to know how the make the most of your cash flow. Instead of being devoured by the raging waves of short-term expenses, use your money as an investment for long-term goals, like a booming business, a dream home, or even your retirement funds.
How NOT to overspend: Establish a goal
One of the major reasons why people fall into the dark pit of overspending is they have failed to establish a goal. The motto “live for today” has been romanticized through the years and some people tend to forget the huge world ahead of them.
To avoid overspending, have a clear mindset of where your income should go and how to spend them effectively. Do you want to move into a large abode and ditch your apartment? Or perhaps invest in a small business? Do you want to trade stocks? Do you plan to take it up a notch and invest in a good education or training?
Then, support these goals with actions. It will be of great help if you divide your earnings into these three categories: short-term expenses, emergency funds, and long-term savings. Put money in interest-generating accounts. Expand your knowledge about handling finances by talking to the right, reputable people who may help you expand your money.
Author Bio: Carmina Natividad is a resident writer for QuickCash, an Australian-based business, providing short-term cash loans for your borrowing needs. She loves writing about personal finance and money hacks.