What makes us overspend? Here are four common reasons and how to overcome them!
1. To keep up with the Joneses
Humans are naturally social creatures who want to blend in with their surroundings. When people who seem to be in the same financial bracket as we are can seemingly afford another pair of designer shoes for each outfit, we should be able to afford them, too, right? The obvious flaw in this line of thinking is that nobody knows the Joneses’ true financial situation.
Break the cycle: Learn to keep your eyes on your own wallet and to ignore how your friends or peers choose to spend their money. Develop a self-image that is independent of material possessions. Adapt this way of thinking when you feel that urge to overspend as a means to fit in.
2. We don’t have a budget
A recent survey shows that 65% of Americans don’t know how they spent their money last month. When all of our spending is just a guessing game, it can be challenging not to overspend. We can easily assure ourselves that we can afford another dinner out, a new top and a new pair of boots — until the truth hits and we realize we’ve overspent again.
Break the cycle: Create a monthly budget covering all your needs and some of your wants. Utilize NetTeller™ and the SeaComm Mobile app to help monitor your spending from the convenience of your computer or mobile device!
3. Retail therapy
Research shows that shopping and spending money releases feel-good dopamine in the brain. This explains the addictive quality of shopping that can be hard to fight. When life gets stressful, or we just want to feel good, we hit the shops or start adding items to our virtual carts.
Break the cycle: There’s nothing wrong with spending money to feel good, so long as you don’t go overboard. It’s best to put some “just for fun” money into your budget so you can make that feel-good purchase when you need to, without letting it put you into debt.
4. Lack of self-discipline
Sometimes, there is no deep reason or poor money management behind our spending. Sometimes, we just can’t tell ourselves “no.” Too often, we allow our immediate needs to take precedence over more important needs that won’t be relevant for years — such as a retirement fund or our children’s college education. We simply lack the discipline to not exchange immediate gratification for long-term benefit.
Break the cycle: Define your long-term financial goals. Create a plan for reaching these goals with small and measurable steps. While working through your plan, assign an amount to save each month. Before giving in to an impulse purchase or an indulgence you can’t really afford, remind yourself of your long-term goals and how much longer your timeframe will need to be if you spend this money now.
Click here or call (800) 764-0566 to discover a variety of financial services with SeaComm. Our goal is to help you live your best financial life!