Overspending is around us wherever we look. From members of the public to authorities and politicians, it seems that everybody is spending more than they can actually afford. It has become an increasingly common problem in today’s world for people to overspend. In fact it is the major cause of most people’s financial problems. If you spend more than you earn then you are overspending and this creates debt. There are many different reasons why people overspend. Here is an overview of some of the most common causes of overspending.
If people are unaware of their own financial situation, what their income is and what their outgoings are, then it is very easy for them to find that they are overspending without realizing it. Devising a budget is very easy to, simply by listing all your income and outgoings for the month. If you do not have enough left over at the end of the month to purchase additional items, then you need to earn more, spend less or look at ways that you can make savings in other areas.
Lack of education
Unfortunately, it is often the case that people have simply not been educated on basic life skills such as managing money and budgeting. Overspending can simply be a mistake because a person has not learnt how to think ahead about what their expected expenditures are going to be and they do not plan ahead for it.
A common mistake that some people make is to see things that they desire whilst out shopping and buy them. They do this without thinking through the financial implications of their purchase. It is important to stop and think whether you really need the item and whether or not you can actually afford to part with your cash.
Using cards and loans
Rather than wait until they have the money through saving, people seem to want everything now. They way that they achieve this is to buy items on credit cards and loans with the attitude of they’ll worry about paying it back at a later date. Not only does this put people into debt and put financial pressure on them to make repayments, they also end up paying more for the item than they would have done if they had waited and saved in the first place. Many people do not seem to realize that when they purchase items on cards or through loans, that they will eventually have to pay the money back and that they will have also accrued interest on their purchase.
Keeping up with the Jones’
It is easy to covet what others possess. If you have friends and neighbors who have more stylish clothes than you, a bigger TV, a larger house and a nicer car, it is human instinct to want what other people have. People may view themselves as being better if they have a larger quantity and better quality material items. They do not wish to appear like the poor relations. This leads to overspending.
In the times that we are living, pure greed can be a major cause of overspending. We see something, we want something, therefore, we buy something. The modern day person wants to have everything at whatever cost.
Being a parent
Again, having children can be a big contributor to overspending. As a parent, it is natural to want your child to have the best of everything. If all their friends have new computer games and the latest trainers, you don’t want your child to be the only one who doesn’t. A fear of them being bullied may also contribute to these feelings. Also, children tend to use pester power whilst out shopping and parents give in to their children for the easy life. Media also plays a part here as they advertise children’s products at prime time to pressurize parents into buying things for their children. All of these things can contribute to a parent overspending.
Some people have a genuine medical problem that can cause them to overspend through a compulsion to buy. This is form of addiction and often requires support from a qualified medical professional.
Overspending is the most likely reason why people get into debt. The reasons why this happens may vary but can include greed, using credit cards, taking out loans, having children, a lack of education, not creating a budget and impulse buying. By reducing the amount that you spend you are less likely to be in debt.