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5 Reasons We Overspend (and How to Overcome Them)

two women out shopping

We’ve all been there. Maybe it’s that I-gotta-have-it urge that overtakes us when we see a pair of designer jeans. Maybe it’s that shrug as we reach for the $6 cup of overrated coffee that says “I deserve this.” Or maybe it’s that helpless feeling as the end of the month draws near and we realize we’ve outspent our budget again. What makes us overspend? Let’s take a look at five common reasons and how we can overcome them.

To keep up with the Joneses

When people who seem to be in the same financial bracket as we are can seemingly afford another pair of designer shoes for each outfit, we should be able to afford them, too, right?

Break the cycle: Learn to ignore how your friends and/or peers choose to spend their money and develop a self-image that is independent of material possessions. Let the Joneses keep up with you!

We don’t have a budget

When all of our spending is just a guessing game, it can be challenging not to overspend. We can easily assure ourselves that we can afford another dinner out, a new top and a new pair of boots—until the truth hits and we realize we’ve overspent again.

Break the cycle: Create a monthly budget covering all your needs and some of your wants. If you’d rather not track every dollar, you can give yourself a general budget for all non-fixed expenses and then spend it as you please.

You can use our free online personal financial management tool, My Financial Partner to establish realistic budgets, track your spending and set financial goals.

For the retail therapy

Research shows that shopping and spending money releases feel-good dopamine in the brain. David Sulzer, professor of neurobiology at Columbia, explains that the neurotransmitter surges when people anticipate a reward—like a shopper anticipating a new purchase. And when we encounter an unforeseen benefit, like a discount, the dopamine really spikes.

This explains the addictive quality of shopping that can be hard to fight. When life gets stressful, or we just want to feel good, we hit the shops or start adding items to our virtual carts.

Break the cycle: There’s nothing wrong with spending money to feel good, so long as you don’t go overboard. Try putting some “just for fun” money into your budget so you can make that feel-good purchase when you need to do so without letting it put you into debt.

Misuse of credit

Credit cards offer us incredible convenience, but they also offer us a gateway into deep debt. Research shows that consumers spend up to 18% more when they pay with plastic over cash.

Break the cycle: When shopping in places you tend to overspend, use cash and you’ll be forced to stick to your budget. You can also use a debit card with a careful budget so you know how much you can responsibly spend.

Lack of self-discipline

Sometimes, we just simply lack the discipline not to exchange immediate gratification for long-term benefit.

Break the cycle: Define your long-term financial goals. Create a plan for reaching them through small and measurable steps. Before giving in to an indulgence you can’t really afford, remind yourself of your long-term goals and how much longer your timeframe will need to be if you spend this money now.

If you need additional financial support, Partner Colorado members can take advantage of our Partners in Financial Health program. A GreenPath™ counselor will work with you to review your financial situation and develop a personalized plan to meet your needs and circumstances. Get help with debt counseling, debt management, credit report review and more.