We’ve all heard that a tried and true way to manage our finances wisely is to spend less than we earn, but according to research the average American spends $1.33 for every single dollar earned. That means it’ll take you working at least ten days into next month, just to pay for how you’re living this month.
Financial gurus will say, “Just stop overspending!” and it sounds both simple and logical, right? Unfortunately, for most of us it’s rather difficult and the reasons that we overspend are often rooted in emotions, not logic.
It’s impossible to recondition what we don’t recognize. In addition to fighting the urge to overspend, we have to look at the behavior that often leads us to do it in the first place.
A Few Reasons You Might Be Overspending…
- You don’t have a plan for your money. Whether you call it an old school budget or a new age “spending plan,” knowing where every dollar that comes in is being allocated is important to your financial health. When we don’t know our numbers intimately (that is exactly what comes in, and exactly what goes out) we spend spontaneously and with no strategy. Those that don’t have a plan commonly overspend.
- You’re more concerned with looking like money than actually having some. For some, overspending is driven by a desire to create a perceived status or impress others. This is where buying stuff to experience validation from friends or family comes in. It shows up because we want to prove that we belong. Instead of saying, “Going out doesn’t fit into my spending plan this month. Let’s chill and watch Hulu” we not only go out, but we offer to pay for the Uber and first round of drinks! All the while, sending our account into overdraft and not actually helping us get any closer to the financial stability we say we want.
- You’re easily influenced by sales and other spontaneous spending. Humans are fascinating. We can see a sale sign and convince ourselves that we can’t pass up this “great deal,” while simultaneously knowing we have other bills and obligations we’re already responsible for. The same money that could and should be used to pay down debt or take care of your needs, can somehow end up being spent on a cute t-shirt from that sponsored Instagram post that popped up on your feed with the word “sale” in it. Sometimes overspending isn’t about the big stuff. The road to overspending is often paved with a bunch of $1 - $20 purchases.
Ways to Stop Overspending
- Customize your card with a visual of what matters. According to scientific research, you can increase savings up to 73% when you are fully and emotionally engaged in the idea of what you are saving for. One way to go all in is to add a visual of what you say you want to your environment. For some it may look like hanging pictures on your bathroom mirror, but why not take it up a notch? After all, you’re not thinking of a vision board when you’re out window shopping or scrolling through Instagram. Your Control Card allows you to customize the image on your card. Saving for a vacation? Use a picture of a beach at sunset. Planning for a wedding? Why not put a picture that represents your big day? Now when you whip your card out to pay for the frivolous items that might be breaking your budget, you’ll think twice as your mind remembers what’s actually important.
- Don’t shop without a list… and stick to it. It may sound elementary, but it’s extremely helpful. When we’re not clear about exactly what we need, we get sidetracked by stuff we didn’t even want. Having a list will help keep you laser-focused next time you’re in Target or the grocery store wandering down the aisles.
- Sign up for alerts. Whether you decide to use a spending plan or not, you should have safeguards in place for those times when your mental math is off and you miscalculate your balance or get caught by surprise and need to know exactly where your finances stand. With alerts from your Control Card, you can get text updates of your activity or balance on the go at no additional charge. Knowing once your account balance drops below a predetermined amount will keep you in control of the financial decision you make next.
Overspending can be overcome with consistent practice and commitment. Remember, no one is perfect, so don’t beat yourself up about past mistakes. Now that you’re aware, you can move forward by simply utilizing the tools above to support you on your journey to start making better financial decisions.
Written by: Patrice Washington
This post is a sponsored post written by me on behalf of Netspend. The opinions and text are all mine. Patrice Washington is the host of the Redefining Wealth Podcast, follow her on Instagram at @SeekWisdomPCW