Spending money is a necessary part of life that requires diligent planning and serious discipline. You may have also realized it’s really fun.
Many of us, often without realizing it, allow our spending habits grow out of control and wreak havoc on our bank accounts. The following are the Seven Deadly Sins of Spending we can all afford to avoid and tips for overcoming them.
It’s easy to get caught up in image. Many people try to maintain an air of wealth or affluence by buying things they can’t afford.
Even you may succumb to pretentious tendencies at times. Perhaps you’ll purchase a name brand over the generic or rely on a credit card for a hot item you don’t have the cash for, all in pursuit of admiration from others.
Over-spending just to perpetuate a facade will eventually catch up with you. It’s OK to admit it when you can’t afford something — and sometimes you have to. Don’t let your ego hinder your financial well-being.
Sure, that shiny new sports car sitting in the driveway next door looks great, but imagine how much better next year’s model will look in yours. Too bad you’re still paying off the sedan you bought five years ago. You deserve it so much more, though.
Keeping up with the Jones’ will do nothing but sink you further into debt. You will not be happier or more successful. Instead of constantly coveting the possessions of others, be thankful for what you have. If you can’t live without a particular extravagance, like a new car, plan a well thought-out budget for it in advance.
Do several items of clothing hanging in your closet still have tags attached? Do you feel a compulsion to buy things even when you know you’ll never use them? Over-consumption to the point of waste is a spending sin that takes a heavy toll on budgets.
Compulsive spending or shopping addiction, is a real issue that can negatively impact several areas of your life. TODAY.com contributor, Laura T. Coffee, says, “If you feel your spending is so out of control that you can’t wrestle with the problem alone, seek out counseling or therapy or try attending a Debtors Anonymous meeting.”
Just about everyone at some point has been guilty of buying something they really, really wanted even though it didn’t make financial sense to do so. The next time you see something you can’t possibly live without (and can’t possibly afford), restrain yourself from purchasing it on the spot. Instead, go home and give yourself 24 hours to “cool off.” Chances are, you won’t feel the intense desire tomorrow.
Do your emotions dictate your spending habits? Anger, stress or any other negative feelings can trigger a desire to drop a wad of cash on something frivolous. Spending money is often a coping mechanism consumers employ to distract them from real-life problems.
If you’re guilty of this as well, find a new way to relieve pent up aggression and anxiety. Go outside, get some fresh air and exercise, engage in an activity with your kids or work on a home improvement project you’ve been putting off for weeks. There are plenty of healthy ways to deal with negative emotions that don’t cause your wallet pain and suffering, too.
It’s not hard to justify keeping that extra bit of paycheck for yourself instead of adding it to your savings account. You worked hard for the money, shouldn’t you have it all right now if you wish?
The truth is, there’s no excuse not to save. Saving money is probably the most important rule of finance. If you can’t trust yourself to part with some money every month, have someone else do it for you instead. Enroll in an automatic savings plan through your bank or an employer-sponsored retirement savings account with automatic deductions.
Buying things becomes more expensive in general when your credit is poor. When was the last time you checked up on your credit?
Don’t slack on regularly monitoring your finances. If you’re careless or indifferent about staying up-to-date on your financial standing, you’ll eventually suffer the consequence of high credit card and loan interest rates due to unknown factors like fraud or mistakes on your credit report. Take a proactive approach to managing your finances and ensure you’re not spending more than you have to.
This article was written by Go Banking Rates, bringing you informative personal finance content and helpful tools, as well as the best interest rates on financial services nationwide. Follow them on Twitter at @GoBankingRates and on Facebook at /GoBRates.