5 Reasons You May Be A Spender, Not a Saver
Because of the pandemic and even before, it’s apparent that many people struggle to save money. Even before COVID, it wasn’t hard to find information online and in the news addressing the fact that most don’t have as little as $400 set aside for emergencies. There are a lot of factors that contribute to an inability to save. A job that barely pays, or inequality, just to name a few. Still, there are those who make enough, that’s not affected by low wages, or any issues relating to money not coming in. For reasons known only to them, a saving account is nonexistent, bills don’t get paid on time, and living paycheck to paycheck is the norm.
You cannot fault those who repeatedly depletes what money they possess by overspending. It’s important to know that most spenders don’t spend because they are reckless, they spend because of psychological reasons that are uniquely theirs. Still, there are factors to consider, such as experiencing lack from a young age. It certainly would explain why someone would buy that tenth pair of shoes, or visit Starbucks more often that one should. Unnecessary spending aside, it’s important to identify and admit you spend excessively, and if you choose either curtail the habit, or take steps towards also saving. The first step to knowing if you may be an exorbitant spender is to identify the characteristics.
Five Signs You Are Overspending
1. Your bill payments are always late
This is the most obvious sign, especially if your salary is above average. You are not alone when paying bills late, the fact is, most do. There are consequences however when you choose to pay your bills late. If it’s credit cards, car or mortgage payments, your credit score may be affected, not to mention the late payment fees you must pay for not paying on time. Other outcomes to keep in mind includes increase interest rates, and a negative impact on your credit history.
2. You have a balance on your credit cards that exceed the recommended credit utilization ratio
When you apply for a credit card, the credit card companies give you a credit limit base on your credit score. The ideal is to not exceed that limit or come close to exceeding that limit. According to myfico.com credit card users are constantly exceeding their credit card limit. In doing so, they are risking their FICO score lowering. Experts recommend keeping your utilization ration below 30% on each card you own. Having a high credit balance doesn’t mean you are doomed. It does however show you are overspending or spending money you may not have.
3. You buy to impress or gratify
If you are buying and spending because that’s what your friends or family members are doing, then you are spending to impress. If you are spending because you are angry, happy, or stressed, then you are spending to gratify. With your finances, it’s not sustainable or strategic to spend your money without careful thought. It’s less about keeping up with the joneses or emotional gratification, and more about doing what’s necessary to be financially savvy.
4. You don’t budget
It’s not that you don’t want to budget, it’s that you don’t want to know the reality of your situation. It’s scary to create a budget that vividly shows how much you are overspending. After all, you don’t want to know how much you actually spend on your morning macchiato, right? This mindset is more common than most would realize. According to mint.com, 65% of Americans don’t know how much they spend from month-to-month. There are many reasons most people choose not to budget their money. If you can be strong enough and choose to make one, you will discover it’s the blueprint you need to create better financial health.
5. You aren’t saving at all
Possibly, you’ve given yourself a myriad of reasons you don’t save. You don’t make enough, car payment, rent, all too high. The reasons are endless. Expenses are usually the singular reason most people don’t save, followed by the belief that their job and their salary are inadequate. Regardless of the reasons, It’s always a good idea to accumulate some savings. Think of the emergency fund you may need down the road or even further ahead, such as your retirement. Some financial cushion is never a bad idea.
It’s okay to overspend sometimes
We all like to indulge and buy things that bring us joy. The key is to enjoy our indulgence while curtailing our spending habits. While it’s hard these days for most, it certainly wouldn’t hurt to stash some funds away for those emergencies we never expect.