If you want to reach true financial independence, and start building some serious wealth, then you need to make sure that you’re spending less than you earn. This might seem like a simple concept, but overspending is a common problem for a lot of people, and something that regularly causes significant stress and heartache for people with financial worries.
If you think that you’re constantly struggling with overspending, it could help to get to the bottom of where the triggers for this kind of behaviour comes from. Here’s your guide too some of the most common causes of overspending you may need to be aware of.
Credit can be an extremely valuable thing in the modern world. Being able to take out a loan or use a credit card when you need additional cash means that you can make a lot of important purchases. Without loans, many people would struggle to get an education, buy a car so they can get to work, or even look forward to owning their own home.
Unfortunately, too much access to credit can be dangerous. If you’re constantly being offered free credit cards with a small spending limit, it can feel like you’re getting free money. Although credit tools do give you access to additional cash, there’s always a downside to consider. Getting credit and loans when you don’t need them could put you in a problematic place.
It used to be that you had to get a paper cheque from an employer and take it to the bank, then wait for that to clear before you could start buying things. You would also need to keep cash on hand all the time – if you didn’t have enough cash, you couldn’t buy something. Although the old ways of spending were inconvenient, they made it much tougher to over-spend.
When you had keep cash on hand and balancing your chequebook each day, spending money was a more complicated process. Now, you can easily just make a payment by flashing a contactless credit card or an app on your phone. Switching back to cash could be the best way to get your spending back under control.
One of the other things that makes spending too easy, is the internet. These days, you can save your credit and debit car details to your account on a website and make a payment in seconds. You don’t even need to find your card details and type them in. This kind of simplicity can make clicking a button and getting new products feel like you’re not spending anything at all.
Unfortunately, over-spending on the web is a growing problem. If you find that you’re constantly buying items you can’t afford – particularly when you’re browsing on your phone, try removing your card details from your accounts.
One of the biggest causes of overspending is a simple lack of control or discipline. If you find it hard to stop yourself from giving into temptation, the best thing you can do is avoid anything that might convince you to spend. For instance, if you know you always say yes when your friends invite you to go out for drinks, then the best thing you can do is let all of your pals know what your current financial situation is really like. This will reduce your chances of getting the expensive invitations in the first place.
If you know that you always go and buy something from a clothes shop when you’re supposed to be “window shopping with your friends”, maybe you should avoid this kind of outing? The less you expose yourself to temptation – at least during the early days, the less you’ll need to rely on your discipline to keep your spending habits under control.
Finally, we can all agree that spending money really does make you feel good – whether you’re indulging in retail therapy for some new clothes or buying a video game. We all enjoy buying the things that we like. However, if you start relying on cash to make you feel better, this can be dangerous.
The best thing you can do is ensure that you do have some money for fun in your budget to indulge yourself when you really need it, but when that money runs out, don’t allow yourself to go over the top and put yourself in debt. Paying yourself back in the future won’t be worth the initial high.