Consumerism is popular in the United States, and with consumerism comes the risk of overspending. According to a recent survey, Americans tend to overspend by roughly $7,500 annually, leading to the rise of payday lenders and skyrocketing credit card interest rates. Simply put, too many people are living beyond their means. However, while there’s nothing wrong with stimulating the economy by spending money on things you like, your financial goals may fall to the wayside if you aren’t careful with your money. Prioritizing where and how you spend can go a long way.
If you think you might be skirting your budget and spending too much, it’s not too late to change your habits. Check out some of the most common reasons people overspend:
Keeping up with the Joneses. Admit it: when the newest iPhone was released, many of you felt the itch to go out and buy it, even if you have a smartphone that still functions. Keeping up with new trends and products can be costly if you don’t have the budget for it, and cutting-edge advertising trends (especially through social media and online influencers) can end up being a trap. If you really want that new iPhone and you know when it’s going to be released, start saving for it so you don’t punch a hole in your monthly budget.
The need for instant gratification. It’s the third decade of the 21st century, and we live in a fast-paced, uncertain world. That’s not inherently a bad thing, but it contributes to a lack of overall patience, which can become a problem when it comes to spending money. We pay attention to the here and now, often ignoring the fact that if you can’t save money in the here and now, your financial future can be bleak. Rather than going out and buying a $100 pair of shoes just because you “can,” consider making a wish list of the things you’d like to buy with their prices. If you look at that list a couple of months from now and notice you’re less interested in some of the items on the list, you’ll understand why suppressing your need for instant gratification can be priceless.
The simplicity of using a debit or credit card. When you pay for everything with cash, you have a stark visual – you’re literally watching your money disappear as you spend it. This isn’t the case when you use a debit or credit card when you make purchases. It’s almost too easy – just swipe your card or insert it into the slot, enter your PIN, and voila, purchase made. Unless you’re religiously checking your checking account balance through online or mobile banking, you’re not getting the same visual effect you get by spending with cash. This makes it all too easy to spend more freely, even when you can’t afford it. If you find yourself with this problem, consider downloading the CardValet mobile app, where you can set up real-time alerts for your checking account balance.