In our capitalist society, spending is a core aspect of our daily lives. We’re constantly spending on essentials such as food, utilities and transportation. Even when we’re doing nothing at home, the fridge is running, the plumbing is at work and a light is on somewhere.
And then you go outside your home, where spending can be as easy and natural a feeling as breathing. On city streets we pass business after business and store after store. All along the way transactions are happening, wallets are being opened, cashier tills are chiming. And quite possibly, a spending problem is developing within you like a disease, infecting your decision making and your overall financial (and possibly mental) health.
Strangely enough, you might not even know this spending problem has taken hold of you until you find yourself in debt, wondering what the heck went wrong. How can you identify a spending problem before this happens, and what can you do to resolve it?
You Justify the Need To Buy Things You Don’t Need
“If you have justification to buy everything when you feel the impulse to buy, you most likely have a spending problem to the point of convincing yourself of the need to buy something every time,” said Alejandra Rojas, a finance professional and money coach. Rojas recommends making a detailed plan for your money.
“Instead of finding the need to purchase in the moment, find what your real needs are in a month and give your money some direction beforehand,” Rojas said. “Once you have the bigger picture in your head, it will be much more difficult for you to justify every single purchase that doesn’t align with your plan.”
You Exceed Your Budget Every Month
“A key sign that you have a spending problem is when you exceed your budget every month on luxury/disposable spending,” said Scott Nelson, CEO of MoneyNerd Ltd. “A budget is a key identifier of where your money goes and if this category constantly overlaps your key spending categories, then you may have a problem.”
A good way to change this pernicious habit is to up the ante on your budgeting by clearly identifying all your spending needs (versus wants) on a spreadsheet. Assess your spreadsheet every month for extraneous buys so that you can do better next month.
You Dread Your Credit Card Bill
“If clients dread seeing their credit card bill each month because the balance only goes up, and never seems to shrink, that’s usually a good sign that they have a spending problem,” said Heather Albrecht, founder of Balance Financial Coaching.
The first thing Albrecht does with clients is to have them start tracking their spending.
“It sounds simple, but the best advice usually is,” Albrecht said. “Once you need to write things down, just like with a food journal, if you are starting a new eating plan, you will naturally make better choices. Awareness is a great first step for most people. Many people are simply unaware of the places where they spend the most money. Once they have done a week or so of tracking, then we can go in and start to make some small tweaks to their habits and get them headed in the right direction.”
You Can’t Balance Your Checkbook
“Uncontrolled spending can lead to the inability to balance your checkbook,” said Annette Harris, founder, Harris Financial Coaching. “If you evaluate your bank statement and notice that you have less than you expected based on your estimations, your spending may be out of control. Also, if you see that you have purchases on your bank statement you forgot to subtract, you may need to slow down your spending. An unbalanced checkbook can leave you frustrated and can take hours trying to figure out where you spent your income.
“To balance your checkbook, keep your receipts in a designated bin and align them with your bank statements every month,” Harris said. “Keeping track of every purchase can ensure that you don’t have overdraft charges. It can also help you identify potential ways to save more money.”
You’re Spending a Lot of Time Shopping Online
“I have observed that families with spending problems often spend too much time shopping online,” said Cody Garrett, a certified financial planner and owner of Measure Twice Financial. “Those small Amazon and Etsy purchases can add up to hundreds or thousands of dollars per month, but we usually don’t have much to show for it.”
A tip Garrett shared for getting this habit under control is to wait at least one day before purchasing something online.
“Sleep on the decision and determine if the purchase still excites you the next day,” Garrett said. “Also avoid a scarcity mindset and the fear of missing out (FOMO) when seeing online deals. They will be back again, and probably cheaper next time.”
You Make Good Money Yet Are Still Living Paycheck to Paycheck
“Do you still find yourself living from paycheck to paycheck, regardless of how much money you make?” said Jim Pendergast, SVP of altLINE, a division of The Southern Bank Company. “There are millions of people in the nation who can go from $30,000 to $300,000 annually and are still broke at the end of the week.
“To curb this habit, make a budget [and] put aside at least 10% of your weekly earnings for savings or investments,” Pendergast said. “Next, give 10% of your paycheck to charity. When you become more generous, you become less likely to spend too much.”
You Spend To Cope With Your Feelings
“Most people can think of a time where they spent a little over their budget on a nice date out or when they purchased a new outfit they didn’t really need, but it made them look and feel great,” said Dino Selita, president and co-founder at The Debt Relief Company. “The problem that comes from emotional spending is that you can lose track of your budget and financial goals. When you’re needing to justify (again, people always try to use logic after bad spending decisions) why you are spending money on things you didn’t actually plan on purchasing, or realize that you regularly spend over your budget, you have an emotional spending problem.”
To curb emotional spending, it is ideal to talk with a therapist or financial coach about what is driving your need for “retail therapy,” as it’s all too lightly called. From there, Selita recommends building a tight budget that blocks you from making emotional splurges.
You’re Constantly Thinking About That Next Buy
“The best way to know if you have a spending problem is if your mind is constantly thinking about that next purchase,” said Sarah Titus, president and CEO, Sarah Titus, LLC. “Once you get one thing, you’re satisfied for a day or so and then it’s onto the next purchase. You think to yourself, ‘What can I buy next?’”
To overcome this, Titus recommends putting a limit on how often you can purchase something.
“If you’re spending every day currently, try every couple of days at first until you work toward not spending on extras but once a week,” Titus said. “If you spend once a week currently, try spending only every other week. Wherever you’re at in your journey, it takes practice and patience, but you can conquer your shopping habit.”
You Can’t Walk Into Target Without Overspending
“It’s hard for anyone to walk into Target and not spend $200, so avoid the walking into Target part,” said Maggie Tucker, friends on FIRE podcast co-host. “We all need things from Target, but keep it focused on what you truly need and what is on your list. To do this we suggest using Target’s free 2-day shipping, their free drive-up ordering, sending a spouse that has stronger impulse control with a clear shopping list and avoid going to Target with your kids.”
Tucker adds that Target’s free 2-day shipping is available to all Target debit card holders (the same debit card gets you 5% cashback on everything at Target), and you can ship yourself just the items you need and avoid the impulse purchases that come from walking through the store.
You Hide Purchases From Others
“I recently came across a potential client who hid purchases from her spouse,” said Kevin Chancellor, a financial advisor at J.A.G. Financial Services. “Hiding purchases is a very problematic symptom because it lines right up with an issue of addiction. People who have addictions will go to whatever means to hide the problem from those close to them. Spending addictions are no different. For example, a married individual is opening up credit cards or bank accounts solely in their names and also trying to hide any documents then it could be an indicator of this issue.
“Secret spending is akin to any other addictive behavior, and so you have to face it like you would an addiction by first admitting that you have a problem, and then work toward coming clean (or, ahem, getting clean). If you need some help overcoming secret spending and/or any other spending problem that is affecting your quality of life, reach out for support by researching tools that SAMHSA offers.”
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