| You may be one of those people who don’t have a problem with debt. You pay your bills on time and in full. “I’d never be so stupid as to max out my credit card on a spending spree!” you might think. No, you might not. Is it possible, then, that a debt-free person could have a spending problem?Just because you almost always manage to keep your debt in control and your checking account is never overdrawn, does not mean that you might not be a chronic spender. Your spending could be having a negative impact on the bottom line and possibly your relationships. Be aware that chronic spending is often done without a real awareness of how much spending is being done. One mother was stunned to realize she averaged $500 per month on “goodies” for her two children. A pair of shoes here, a new outfit or two there, a few toys on each grocery store visit. These $20-30 purchases were putting a severe dent in the family budget without it even being a conscious spending effort.
Check to see if any of these signs of chronic spending apply to you. As they say in self- help programs, “The first step to recovery is admitting the problem.”
You spend to make yourself feel better. Maybe the newest techno-gadget or a luxury leather jacket will cure what ails you, right? Not so. Elizabeth Lewin, CFP and author of Family Finances says, “If you’re buying to feel better or out of a sense of entitlement, you’re spending for the wrong reasons.” Your family may be in chaos and your boss may not treat you right, but buying something to perk you up won’t have any long term benefit and may ultimately be harmful.
You find yourself saying “Oh, why not?” Most of us will give in to instant gratification at some point, but some people have a hard time resisting those impulses and constantly give in to temptation. Part of the problem is a lack of deeply held core goals or values that should normally take priority over the impulse to buy something new (Like buying the newest designer purse despite the fact that you bought one last year and could put the money into an investment account instead).
You tend to flash your money. It feels good to show yourself and others that you have money to spend. It may seems quirky, but some people actually spend out of a fear of poverty, says the founder of Cheapskate Monthly Mary Hunt. Spending feels good and makes you feel wealthy, even though it’s short-lived. Another pitfall often seen is spending to impress others. It is a sad fact that in many luxurious neighborhoods, the kitchen may be filled with gourmet appliances, custom-made furniture and marble countertops, but the owners rarely cook. Why did they spend such extravagant amount? To impress the neighbors. Regardless of the scale of your effort to “keep up with the Joneses”, it’s still an unhealthy use of your money.
You don’t have a solid understanding of money. Financial ignorance is another reason that people overspend. In fact, sometimes people choose to remain uneducated so they can tell themselves and others, “Oh, I never worry about money.” Often there is a hidden fear that education will force them to think about their money more and they don’t want the perceived stress. So they just spend and hope it all works out OK.
You see your credit limit as the amount you have to spend. If you regularly charge close to your credit limit and sometimes have difficulty paying off the balance, you may be guilty of thinking that a credit limit is somehow money in your pocket. Not so.
Did any of these hit close to home? If so, start a spending journal for the next month or so and try to pinpoint why certain purchases were made. Determining the origin of overspending in crucial to controlling the urge. |
