Ideas & Insights

Overspending - Which Type Of Spender Are You?

Banking Education 2/17/2021 8:37:00 AM

We all know the feeling: You remember to check the balances on your bank accounts, and when you see the figures, you quickly realize you have been spending way too much money. There are many common reasons why we overspend, but recognizing what triggers you to buy things is a great first step in taking control of your finances.

Keep reading to see if you recognize yourself in any of these scenarios, then consider the suggested recommendations to make improvements. It’s possible to control overspending, it just takes a little bit of knowledge and planning. Your bank account (and future self) will thank you for it.

You want to keep up with the crowd

Those Joneses … it just seems like they have all the good things in life. In our culture, it is all too easy to succumb to social pressure and overspend on something more expensive than you had planned. People often equate money and possessions with preconceived notions of success and happiness, so it is no wonder we try to keep up with friends or bolster our appearance on social media by buying that perfect accessory or vacation. And in social situations, it can be difficult and embarrassing to be the one person who objects to a group plan.

One solution is to find a “budget buddy.” There’s a good chance at least one other person in your group of friends is also trying to stay money-conscious. Seek out that friend and make a plan to resist the temptations together. It may not feel great to deny yourself in the moment, but if you have a friend by your side, your chances of staying on track are better than by doing it all alone.

You forgot to budget

Even when we attempt to plan for special occasions, most of us tend to underestimate how much they’ll actually cost. Special occasions start popping up fast and can seem like they’re happening in overwhelming clusters – weddings, birthdays, anniversaries, vacations you desperately need— and all of a sudden, you are living beyond your means.

One solution for this is to simply review your monthly and yearly budget in advance. Birthdays and holidays don’t change dates. Predict important dates and events as far out as you can, and work those exact expenses into your budget. You might even consider “over budgeting” for these occasions, just in case.

You’re a giver

In addition to special occasions, many of us find ourselves overspending on gifts. We care about the people in our lives, and want to show them how much they matter to us. We confuse money with emotions and go overboard in the spending department.

If you want to give meaningful gifts, identify important recipients in advance and start planning specific gifts for them ahead of time. Set aside a little money each month to build up a slush fund you can use to buy gifts so you won’t get hit with large receipts all at once. Or better yet, find ways to give gifts that hold a ton of meaning but that don’t cost very much. You could send a homemade card or cookies, or call up a friend and sing them a song or make them a small video. Make it an experience instead of something you can’t afford. Your loved ones will appreciate it, as it will mean so much more.

The bargain hunter

Good deals are very tempting. Finding a bargain while shopping can make you feel great, but that feeling is only temporary, and many times results in “buyer’s remorse.” Subsequently, we often attempt to chase the good feeling again, shopping for deal after deal, and eventually we are left with large amounts of items we did not need or really even want. Retail marketers know our weakness for deals, which is why they constantly flash the word “SALE” across stores and websites. So, rather than allow yourself to get caught up in euphoric spending, try to remember that just because it says the word “SALE” doesn’t mean it’s actually something you should purchase.

A simple way to avoid this is by only shopping with a specific list in mind. If you know what you are looking to buy before you shop, you can take the time to find the best prices and avoid walking around stores or clicking on websites just to see what is on sale.

The emotional spender

For many people, spending money is a way to cope with emotions – we jokingly call it “retail therapy.” Often times, we simply overspend because we are mentally depleted after a long day and do not have the will power to tell ourselves No. Despite popular thought, having a bad day isn’t a great reason to justify buying a new pair of shoes.

Take note of your feelings. Shop when you are in a good place emotionally, instead of when you are tired and hungry or stressed and bored. You deserve the gift of financial freedom more than you deserve those new shoes.

When you can recognize potential overspending pitfalls, the better equipped you will be to keep yourself on track. Splurging occasionally and leaving a good tip is not a bad thing if you plan on it, but knowing why you overspend can go a long way to stop the problem before it starts and help you build healthier lifelong financial habits.

Our professional banking team is experienced and equipped to help provide you with the advice and resources you need to reach your financial goals and build better money habits. Contact one of our Sunflower Bank or First National 1870 team members to start a conversation today.