Money Matters: How to Prevent the Top 5 Financial Regrets, Habitually Overspending #1
This post is from our friends at Learnvest.com and offers a great deal of information on how to avoid the top 5 Financial Regrets, starting with the first… Habitually Overspending. Over the next several weeks, we will take a close look at all 5.
A recent poll conducted by the National Foundation for Credit Counseling (NFCC) shows the following greatest financial regrets, and five financial actions–or inactions– “Habitually Overspending” topped the list.
- Habitually overspending
- Inadequately saving
- Buying a house
- Not buying a house
- Not saving enough for retirement
When reading through these regrets and solutions, make sure to keep in mind what’s right for you in your situation. People are different.
1. Habitually Overspending
Most of us have felt the pang of guilt that accompanies overspending at one point of another. But what if you’re worried it’s become a habit–and you’re watching your money slip away? Everyone spends for different reasons, and the key to combating overspending is to identify why you spend. Do you have one of these spending triggers?
- The Emotional Spender: You buy because it makes you feel better when you feel down.
- The Compulsive Spender: Buying gives you a high, so you spend money all the time.
- The Absentminded Spender: You don’t pay attention to all the little things, so when you get your credit card bill you have are baffled by how much you spent.
- The Social Spender: You spend more when you’re with friends.
- The ‘It’s on Sale’ Spender: You can’t resist a sale, even if you don’t need (or particularly love) the item.
How to Keep It From Happening: Try these strategies:
- The Emotional Spender: Instead of retail therapy, address the real problem. Talk with a friend, write in your journal, visit your therapist and ask yourself if you’re buying because you need the item or because you think it will make you feel better about what’s really fueling your buying sprees.
- The Compulsive Spender: Find something else that makes you feel as good as spending money (preferably something free or inexpensive). Exercise? A creative activity? Volunteering? If you feel you need help recovering from a shopping addiction, visit a resource such as Shopaholic No More.
- The Absentminded Spender: For one month, stop using your cards, just use cash and track your spending. Allot yourself a certain amount per week, and see how little things add up. When you ease back onto cards, check your spending every day with our free Financial Inbox.
- The Social Spender: When approaching a social situation, think about what you really want from the experience—a $100 dinner tab that stretches your budget or quality time with your best friend?
- The ‘It’s on Sale’ Spender: You need the help of a more level head. Someone that can help you think through whether you really want the item, whether it is such a good deal or whether another similar deal is around the corner. Or, you can always use our Purchase Appraiser.
If you don’t have a particular spending trigger, you should still create a budget and take stock of your spending every day in your Financial Inbox. That’s the best way to make sure you’re not going over. For more information on overspending, check out our Psych of Money section. If you find yourself in debt, our free Get Out of Debt Bootcamp can help you figure out how to escape.
In the Coming weeks, please watch for in depth looks at the other top 4 Financial Regrest in our “Money Matters” blog!
- Twelve Tips Toward Financial Independence (turbotax.intuit.com)
- 5 Traits to a Successful Budget (cashnetusa.com)