Last Updated on May 20, 2022 by rabiamuzaffar
In some instances, you can’t avoid having to spend a little extra like if your car breaks down or if you have an unexpected medical bill. However, there are plenty of instances where we just overspend, and for no good reason. Those are the activities you should avoid if you’re looking to save money and build your wealth.
According to a new survey, as much as 65% of consumers don’t know how much they spent in the last month. Overspending can become a bad habit if you’re not careful.
Keep reading this guide to learn the psychological reasons for overspending and how to stop spending too much money so you can build your savings.
1. Consumerism
It may not even be all your fault that you’re spending too much money. After World War II, Americans were encouraged to spend their money, even being looked at as patriotic. Consumers were buying everything from cars to TVs, and appliances
As companies develop new methods of marketing and ways of promoting their product to consumers, it started a spending cycle in America. This “new and improved” mindset boosted U.S GDP and sparked the economy. The spending mindset has now carried over to the next generations and is becoming even more powerful with factors like mobile phones and social media playing a big part.
You may be wondering how to stop overspending and get out of the consumerism mindset. One of the best things you can do is ask yourself before each purchase, do you really need this?
2. Keeping up With Peers
Another common psychological reason people overspend is to keep up with their peers. There’s a common saying called “keeping up with the joneses” that is used to describe this type of activity.
This can be a destructive behavior to be involved in and can be detrimental to your bank account. Many times, the people flashing their money, don’t have the money they appear to. True wealth is often in things you can’t see – stocks, real estate, and other assets.
3. Access to Credit
The fact that you can spend money and not immediately have to deal with it, can also lead to overspending. With easier access to credit, people don’t think too much about spending the extra money.
But, if you were using your debit card, you might think twice about making the additional purchase. Luckily, if you are buried in credit card debt you have options available. If you need help consolidating debt, contact the best iva company in your area to help you get started on a path to recovery.
An iva company can help you deal with creditors and make plans to pay down your debt on your behalf.
Learn How to Overcome These Psychological Reasons for Overspending
These few psychological reasons for overspending can drain your bank account and leave you with nothing. Rather than falling into these common traps, it’s critical to develop an independent mindset and learn the best practices for saving money. As you practice saving money, it will become automatic over time.
If you are interested in learning some of the best money practices, head over to our website and learn how to save money.
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Read more: 5 Simple Ways to Manage Wealth Better
