5 Reasons You Overspend Your Budget
There are two sides of a coin, as well as there are two solutions to your financial struggles: earn more and/or spend less. I much prefer the ‘die-hard’ way of earning more. But, please, no payday loans, shark loans, credit cards or any other high-interest cost loans. That’s not your income to spend, but the grave you are digging for yourself!
If you are not eager to negotiate a pay raise, change your job or create your own business yet, don’t worry! I got you covered. Let’s turn your focus towards “SPEND LESS” part and identify your spending triggers.
Do you know, what’s admittedly the No. 1 financial struggle in America?
Overindebtedness? No (shocker, would have been my first guess as well).
Saving more money? That’s very common, but not the tipping point.
Making more money? (Well, wouldn’t everyone want that?)
I’ll give you a hint… the minimalistic lifestyle, keep only the things that “spark joy”, zero-waste lifestyle, sustainability… do you know what all this has in common?
They are all fighting the OVERCONSUMPTION.
And, sadly, overconsumption is not limited to our personal financial situation. There are many psychologists, economists, and environmentalists who are turning their heads around to slow it down.
I know you’ve heard enough about fast fashion filled landfills, destroying the ecosystem. Businesses in Asia breaching all the safety limits to produce enough T-shirts for everybody and paying minimum wages to their employees. Impulse buying. If you think about the impact of this problem, it’s mind-blowing and just the tip of an iceberg.
You know what at the root of this? Us. There is no smoke, without fire. And demand drives supply. What’s more, it’s scientifically proven that buying stuff makes you happy (for a short time, though!). And, comparing ourselves to one another in terms of the things we consume drives much of our personal life satisfaction. That’s why the market for fake designer items thrives. And that’s possibly one of the reasons for our overindebtedness because we just need that brand new Range Rover to drive around the city, is impossible to park anywhere and did I mention? It’s the same one as your neighbors have! (The surprise, right?)
As passionate as I am about this topic, I believe there are many easy solutions for us that can be implemented in our daily lives.
Foremost, you have to identify the triggers that drive your consumption and then we can go through strategies that can significantly decrease your consumption.
Find your triggers
How did you start your Friday evening? Was it: “Oh, I’ve had a long work week; I should reward myself with my favorite cake from that very nice french bakery around the corner!” (bear in mind, for most us, the work week is the same 40 hours EVERY WEEK!)
Many times our spending relates to our physiological and emotional needs.
1. Physiological needs
Let’s start with a classic. A good example of physiological needs influencing your consumption is your grocery basket depending on the time you last ate. After that very long day at work, you know you have to buy a few things to prepare the dinner tomorrow. You have a list of everything necessary and are ready to accomplish your mission. And then… you pass by those very good-looking cookies that are on sale…and in your basket, they go.
On the hindsight, you know you’d have easily passed those any other time of the day.
2. Your mood
It might be that you’ve started your day off on the wrong foot. Nothing just works out! But that little black dress just might lift the spirits? (Fingers crossed!) According to data gathered by Harris Interactive, 31% of women say that they’ve shopped specifically to elevate their mood, and 53% of people have shopped as a way to celebrate something. It’s clear that shopping is associated with good feelings – but it comes at a cost.
How about you try using that gym membership of yours to lift your spirits next time?
3. The idea of saving
You’re such a bargain hunter! January sales are the best time, right! 20%, 30% even 50% off in your favorite shop! (squealing in happiness) You come home with 3 bags and have saved 500 EUR.
But how much did you spend? Would you have bought that without the sales tag attached to it? Is there a place for that in your apartment or wardrobe? Isn’t that the 5th black jumper that you’ve bought in the last 2 months?
4. Keeping up appearances (not with the Kardashians)
Let’s think about practicalities? You are mainly using your phone to receive and send messages and make calls. Will the new phone perform better or increase your productivity?
5. Your lifestyle is larger than your budget
It might be that your financial standing has increased/decreased unexpectedly. We need time to adapt to any new changes. But while we have a transition period, we might be tempted to buy more, because we previously could not. Or we might be spending more than our resources because that’s what we have always done. You are tempted to protect your prior lifestyle. However, changes in your family status, age, income level might pressure you to adapt to the more-modest standard of living.
All these can lead you towards impulse purchases to receive instant gratification, increase your self-esteem, and save you from your evening boredom. But will they move you towards your financial goals?
You might need time to go through your emotions, needs, wants and daily habits to identify your triggers. Yet, your wallet might be very thankful for that in the long-term.
Going through your spending triggers should give you ideas on how you’d be able to decrease the unnecessary clutter. Nevertheless, I also want to give you some ideas, presented in my next post on Wednesday! (I know, this ending is so suspense it seems you are reading romantic chick lit.)
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