I’m sure you’ve heard the proverb, “the road to hell is paved with good intentions”… So is the road to bankruptcy. Every month you tell yourself that you’re going to start fresh and take control of your finances. You read the motivational quotes, buy a planner to get yourself organized, and you’re ready to go.
…Then your friends invite you out for food and drinks.
…Then you see a super cute outfit at the mall that you have to get because it’s on sale.
Or my favorite, “I survived another week of work so I DESERVE THIS”.
Next thing you know it’s the end of the month and you’re wondering where all your money went and why your credit card bill is so high.
I’m sorry to break it to you my friend, but you are overspending.
Most of our overspending habits are subconsciously planted in our minds from our childhood, culture, and societal norms. Overspending can be a hard habit to break, but it’s not impossible. The first step is recognizing the habitual behavior. The next step is replacing it with a healthier habit.
Overspending Habit: Keeping up with the Joneses.
Or in this day and age, Keeping up with the Kardashians.
Americanism: Using money you haven’t earned to buy things you don’t need to impress people you don’t like.
Comparison is everywhere, especially in our subconscious. Seeing everyone’s highlight reel on social media can cause FOMO (fear of missing out). FOMO is a leading cause of overspending. You may feel the urge to go out of your way to make your life look more lit than it really is by constantly going out to eat, partying, or renting a private island to break 1,000 Instagram likes.
Moral of the story: DON’T GO BROKE TRYING TO IMPRESS PEOPLE ON A FREE APP. Seriously, PLEASE don’t rent a private island to get Instagram likes.
How to fix: Stay in your lane. Run your own race. Write down 10 things you’re grateful for daily. Do a social media cleanse. Count your blessings, not someone else’s.
Overspending Habit: Using credit instead of cash
Every time you borrow money, you’re robbing your future self.Nathan W. Morris
If I had a dollar for every time I heard, “I’ll just use my credit card because I get points,” I’d be wealthier than Warren Buffett. I’m all about free flights and rewards, but at what cost? If your interest rate is 15-25% is it worth the 1.5% cashback you’re getting? Is spending $5,000 in the first 3 months of opening up a new card worth a “free” $200 flight? Are you paying your credit card balance in full every month? According to CNBC.com, About 52% of cardholders carry a balance month to month.
“REWARDS” CAN GET YOU CAUGHT UP. THIS IS A TACTIC USED BY CREDIT CARD COMPANIES TO KEEP YOU IN DEBT. THEY ARE “REWARDING” YOU FOR BEING IN DEBT AND KEEPING THEM IN BUSINESS.
Swiping and using credit can be addicting. Credit cards can give you a “buy now, pay later” mentality. Your frugal friend used to have seven credit cards, and now I have two. I had to cut up and cancel the rest because I know myself. I will swipe, swipe, swipe, swipe, swipe, then act shocked when my credit card bill arrives (with interest).
How to fix: Cut up your credit card. Use cash envelopes. Give yourself a “fun money” allowance. Leave your credit cards at home. Read a book on money management. Take a nap (sleeping is free).
Overspending Habit: The “latest and greatest” syndrome
“If you live for having it all, what you have is never enough.”Vicki Robin
In the United States, we live in a consumeristic society where newer is better. We need to be up to date with the latest car, phone, and fashion to stay relevant and feel good about ourselves. If you’re always chasing the “latest and greatest” you’ll never be satisfied with what you have, and you’ll most likely be broke. This habit is draining our pockets while corporations are laughing straight to the bank.
Latest and greatest syndrome #1: Smartphones. Y’all haven’t realized that Apple keeps releasing the EXACT SAME PHONE YEAR AFTER YEAR?! Honestly, Apple hasn’t done anything innovative since Steve Jobs died. My iPhone 6 has the same functions as the iPhone XRZQU3 (or whatever version they’re on). Sure the camera is better with faster simulations, but I can still make and receive phone calls, text, take selfies, use social media, and stream music. I OWN my iPhone 6 and it only costs me $20/month for service. For the love of all things frugal, please stop standing in line year after year for the exact same phone. Apple is getting richer while you’re living paycheck to paycheck.
How to fix: Keep your device until it literally doesn’t work anymore. Sometimes a simple battery replacement for $30 at the Apple Store is all your phone needs. From there, it’s like brand new.
Latest and greatest syndrome #2: New cars. Don’t get me started on car payments. Car payments can keep you broke 5-7 years at a time. The more you pay into a car the less it’s worth. Do you see the irony?
How to fix: Do your research before buying. Purchase a reliable pre-owned vehicle. Save up to buy your car in cash (it gives you more bargaining power). Who cares what year/make/model your car is? Does it get you from point a to point b safely? Ride your car until the wheels fall off. Oh, and if you hit me with the “but I love the new car smell,” there’s a spray for that. It’s literally called New Car Smell and you can buy it on Amazon or your local auto store for $20 or less. You’re welcome.
Overspending Habit: Not knowing what you are spending your money on.
“The person who doesn’t know where his next dollar is coming from usually doesn’t know where his last dollar went.”Unknown
It’s payday. Your bank account has been replenished and restored!
*Fast forward 2 weeks*
It’s the day before payday. You have enough money in your account for a double cheeseburger and a six-piece nugget. Thank goodness for McDonald’s McPick 2 and ramen noodles.
WHAT THE HELL HAPPENED?! We promised ourselves that this wouldn’t happen again. Last time was the last time we were going to live paycheck to paycheck. Sorry, my friend, this is what can happen when you don’t track your spending. There is no quicker way to lose your money than by not keeping track of it.
Tracking your spending is the MOST IMPORTANT step if you want to become (and remain) debt free.
Tracking your spending shows that you value your time and your money. It also holds you accountable for your purchases. Make it a goal to track your spending EVERY SINGLE DAY.
It does not matter if it is the 1st of the month or the 27th, start tracking your spending TODAY. It is time to create new habits and keep an eye on your hard earned money.
There are plenty of ways to track your spending. There are free apps that will track your spending and break down each category, like Mint or Wally. Certain bank apps will even break down your spending as you go.
I use ‘Notes’ on my iPhone to track my spending, then transfer the data to a Google spreadsheet, and calculate my totals.
How to fix: Track your spending. Locate your most recent bank and credit card statements to see what you actually spent. Take note of every purchase along with the cost. See what expenses you can cut back on, like coffee, eating out, and subscriptions.
Overspending Habit: Impulse buying.
“…our impulses are too strong for our judgement sometimes”
You’re not alone. There’s a bit of evil Kermit in all of us. Human beings have emotions and feelings, and it’s natural for us to act upon them. However, acting on them too soon can leave you broke. Impulse triggers are REAL. Businesses hire psychologists to study what causes consumers to purchase (or not purchase) products. Marketers have designed a way to sell a product without drawing attention to itself. Good advertising is subconsciously ingrained in your brain. Make a conscious decision to keep your money.
How to fix: Know your impulse triggers and recognize when/where they arise. Is it at the mall? Is it every time you go out to eat? Or does it happen whenever you leave the house? Do your research on purchases. Think before you buy. Turn off the television and turn off your phone. Give yourself a waiting period. Remember your goals.
To decide whether a purchase is necessary, ask yourself:
*Do I really need it?
*Do I really need it today? What would happen if I don’t buy it now?
*Is there a less expensive way to meet this need?
Don’t let overspending be the demise of your money goals. Use these tips and take the power back. Control your money, don’t let your money control you. Which overspending habit do you struggle with most? Your frugal friend has some slots available if you want some additional help achieving your money goals 🙂