Common Reasons for Overspending

Why do people overspend so much? Chances are good that we overspend because we really want to keep up with everyone else. It is all about status and trying to show others that we are the top dog and no one is going to do better. However, overspending tends to cause financial problems and a downward spiral that could be avoided quite easily.

The best way to stop overspending is to simply know what you need. Overspending comes from not knowing what you need or what your budget is. You might add a couple of features, or spend a little more for quality, but you will stop a complete assault on your wallet simply by knowing what you are looking for. When you know what you need it helps determine if you can afford what you want. 

Say you needed a TV because yours broke. You don’t need a 60 inch flatscreen, but you know you need something that plays movies because you have young kids. You also know that you need to spend under 1,000 dollars. Perhaps you compromise with yourself and get a flatscreen that is 32 inches and put some of the money you saved toward a new TV in the future that you can save up for.

Not knowing what you need is one reason you might overspend, but another reason is because of your ego. You want the shiniest sports car and the newest one as well. You want an inground pool even though an above ground is OK. There might not be room for a hot tub in your back yard, but you are going to spend that 3,000 dollars for it anyway. Who cares why you want it, you just need to have it now.

Overspending can also come from the thinking that more money equals a better product. More money doesn’t always equal quality at all. Remember that sometimes you are simply paying for the brand name, or for the fact that the product is new and costs a lot to make. Never mistake price for value. Do your research before determining if you need to overspend for something.

Most people have some common sense when they spend their money. However, it can happen that you overspend for something that you just have to have. It is OK to overspend at times because you might not have a choice, but constant overspending simply eats into your budget.