When it comes to money management we can be our own worst enemy. Even when we've made an effort to budget carefully, there are times when things go awry, we overspend dramatically, and we end up borrowing money for everyday expenses at the end of the month. Some of the things we overspend on are unavoidable expenses out of the blue, but sometimes we have simply fallen victim to our spending Achilles Heel.
So what's your spending weakness, and how can you protect yourself against it?
There are seven common reasons why people overspend. What's your weakness?
Sometimes we use spending as a reward. If we've had a tough day or a difficult week we might tell ourselves we deserve to treat ourselves to something new. We get a rush of endorphins when we buy our new purchase, and briefly feel better about things. We might tell ourselves we bought something we needed, but we're actually buying the rush of pleasure.
If you want to reward yourself at the end of a tough day, by all means do so, but think of something entirely unrelated to shopping. You could carve out time for a bath, watch your favourite film, or call a friend to catch up.
Shopping is often considered a leisure activity - especially when we're bored - it's why they have shops in airport lounges. We go for a browse around the shops, we give ourselves an excuse to buy something, and before we know it we've bought yet another thing we don't need.
If you like to browse, there's nothing stopping you, just take enough cash to get you home and no more. If that sounds much less fun than shopping, it could be time to get another hobby.
3. Attention seeking
Some people buy to boost their self-esteem. They're not buying the object itself, they're purchasing the admiration of others. They tell their friends about it, they tweet, they Instagram, and they Facebook. However, this is only ever a fleeting reward, so is an expensive way to boost your feelings of self-worth.
If you recognise anything in this, then the real answer is to start with why you feel the need to boost your self-esteem in the first place. However, if you're simply trying to cut out this kind of overspending, you can impose a ban on bragging about whatever you buy. That way there's no point buying for attention, because you're not going to get any.
Humans are pack animals, and we're fundamentally interested in where we are in the pack. It means we're suckers to peer pressure as kids when we need to have the right pair of trainers, and we're sill suckers as adults when we want a better car than our neighbours.
Being aware of the fact that it doesn't really matter is the first step. If this doesn't help at all, then you need to factor these spending ambitions into your budget. If you are sure you need the 'right' car to live a happy life, draw up a budget and work out how you can afford it. When you start having to sacrifice other things to afford the car, you'll discover whether it's really important to you after-all.
If we're feeling guilty about not spending enough time with our family, or not being a good enough friend to someone, we can end up being over-generous in an unconscious effort to salve our conscience. Working parents are particularly susceptible to this.
It's hard to prevent this, because it's difficult to disentangle the reasons why you want to buy something nice for your kids. However, if you know you feel bad about neglecting someone, before you get anywhere near the shops, make space in your diary to devote to them, and deal with the guilt first.
It can be easy to drift into overspending when it's all going on plastic. We don't think about how much we're spending or how we're eating into our monthly money, because we can't see it happening.
The solution is two-fold. It's best to carry cash so you can see exactly how much you are spending, and how your cash is being eroded. It's also worth carrying a spending diary and making a note of everything you spend. If you have to write it down, it may make you think twice about it.
There's great pleasure to be had from finding a brilliant deal. It's why many people are so excited about sales, or sign up to deals websites and hunt down bargains at all times of the day and night. If you are a canny shopper who uses these deals to buy things you need, then this is a great approach. However, if you often end up with things that you never use, then it's worth asking yourself whether the adrenaline rush you get from snagging a deal is what's really driving your actions.
If you regularly make poor purchases because they seemed like a great deal, you need to find a way to be more disciplined. Start with what you need and why. If you definitely need something specific, then look for a deal. However, if you find something else during your search, or you don't find the exact item you were looking for, then walk away - it's not a deal if you didn't need it in the first place.