Retail therapy can be a salve to bad breakups, boredom, and most of life’s problems. But if you’re not careful, you could wind up in financial trouble and be forced to scour the internet for bad credit debt consolidation loans instead of new clothes.
Here are 5 dangerous habits that could result in you spending far beyond your means.
5 Habits that are Causing you to Overspend
1. You Spend Emotionally
Emotional spenders swipe plastic for everything from celebrating a promotion to sobbing over a bad ex. If you’re guilty of buying items simply because you’re happy/sad/bored, etc., it’s time to dig deep into why you’re using stuff as an emotional crutch.
Buying a nice item every once in a while to cheer yourself up or commemorate a big event is no big deal. But if it’s happening on a regular basis, you need to reexamine your habits. You can try putting a 24-hour pause on buying items to ensure that you actually want the purchase the following day and not just because of a temporary emotion.
2. You Pay for Services you Don’t Use/Need
You want to get in shape, so you belong to three gyms (but never go). You want to stay informed, so you’re subscribed to four newspapers (but only read one). Paying for monthly services that you don’t use or need can cause you to rack up unnecessary charges. Instead of buying items or subscriptions that you aspire to use, make sure that you’re only paying for what you actually need.
3. You Try to Keep up with the Joneses
Your neighbor has a Chanel bag, so you buy two. Your best friend just upgraded to a Lexus, so you buy a BMW. Comparing yourself to others and trying to keep up with their spending will be the death knell of your financial progress.
Remember: material things don’t equate to wealth. For all you know, your designer-clad neighbor is about to declare bankruptcy due to their label-worshipping ways. Living simply and allowing your money to earn compound interest may not afford you a flashy convertible, but it will give you financial peace of mind.
4. You Don’t Follow a Budget
If you don’t have a budget to follow, you might not realize that your spending is becoming unwieldly. Creating and following a budget can help you keep your spending on track and avoid making discretionary purchases. To create a budget, compare your post-tax income against your monthly spending.
If you find that you’re spending more than you’re making, it’s time to tweak your purchases and cut out what you don’t need. Make sure that you revisit your budget and track your expenses frequently.
5. You don’t have Any Financial Goals
We know, we know: buying stuff is way more fun than saving. But you’ll be able to better sacrifice short-term happiness for long-term wealth if you keep your financial goals top of mind. For example, do you dream of finally owning your own home?
Getting out of student debt? Setting money aside for your retirement? Creating and focusing on your goals will help you kiss overspending goodbye. These 5 habits can cause you to overspend, but the good news is that they’re all easy to fix.
By stopping emotional spending, only paying for services you use, not coveting thy neighbor’s things, following a budget, and focusing on financial goals, you’ll be well on your way to financial success.