Psychology models suggest different people seek pleasure differently. When it comes to finances, the happiness and the pain which people feel can be characterized in two broad ways; the savers and the spenders. On one end you have the spenders, who feel the pinch whenever they have to spend money (forcibly or unforced) and they feel money is safe in the bank. On the contrary, the spenders experience pleasure in buying new things, they are shop hoarders, but, they feel immense pain in wait for the arrival of their good or any other reason that hinders them from using the product they bought.
According to a report given by the NFCC (National Foundation for Credit Counseling), about 20% of the consumers fail to meet their monthly needs without credits. And, the other 80% consumers’ probably would use credit cards in their bad times.
Now, going back to the psychological model of spending, we know spending money on “wants” may give you happiness. This is due to the Instant gratification, but what is Instant gratification? Instant gratification is the instant emotional response of happiness to the full wellness of a desire. In some instances, spending money may lead to happiness, but only to a certain extent. Buying things can serve your need or purpose, but overspending leads to tension and stress.
Many Americans face the problem of overspending. According to an official report, the average credit card debt per family was $16,140 as of October 2015. The Americans buyers owe $890.9 billion in credit card debt.
Why we buy something which doesn’t suit your budget?
The various causes of overspending
1. Shopping is an addiction
Like the drug addicts there are shopping addicts also, those, who can’t spend a day without buying something. A report published by the Stanford University, says that most shoppers end up facing the problem of debts because of overspending- they buy stuff which they don’t use in their daily life and are laying dirt covered in their storeroom.
Shopping addicts are often precipitated by feelings, anxiety and depression, similar to a drug addict, they also have drug- like highs, but leaves the shopper into guilt, disgust, and fatigue after some time. Yes, of course not all shoppers are shopping addicts, it is an extreme scenario.
2. Wanting to keep up with your social circle
In today’s world, our social circle is not just restricted to our next door neighbors with a massive HD TV, a new sedan which we can view through the window. Because of social media, our social circle has increased in radius. We can see what our far and near friends are up to. When we see someone’s new car post, and then, we immediately fell a pain in our hearts, we purist we could afford a new a new car. Psychologically, we feel that we deserve everything which our friends and relatives have. In order to keep up with our friends, we end up creating financial instability.
3. Becomes a prey of marketing
Step into a mall without a proper buying list and without any doubt, you will go for the products advertised, and end up buying things which you don’t need at the present. The sales are there to lure your mind and eyes to buy something which you think is a great deal, but actually, stuff which is either of low quality or expired.
4. Low self-esteem
This is the thing which is pushing us towards huge debts. In a bad mood, people tend to use the retail therapy to boost their mood, and fill their lives with joy and happiness. But, the problem is these happy moments’ stays for a short interval of time, and then again you look for things which will make you feel good about yourself.
5. Consumers believe in lies
It’s not tough for consumers believe in lies with the amount of promotion out there. If I have nice things, will be happier and will have many friends. This store is offering a 6 month payment plan, zero interest rate, so what’s the harm in buying now. I can pay later. Do any of the above sound familiar to you?
Truth
The truth is not that we will be happier, if you more things. But, the real truth is buying expensive products provides greater happiness and satisfaction. And, the delaying gratification also increases the feel good factor that makes you appreciate your purchase longer. The latest phone will be in the news for a month or so and then it will vanish, as the material possession has an expiry date, but experiences don’t, they last forever.
Steps to take
If you are really serious about curbing down on your overspendings, then follow these steps-
Set up a monthly budget that satisfies your needs and addresses savings and debts your own. Be sure to allocate some funds for your wishes like entertainment, dining, etc.
Reduce unnecessary expenses- Like cut the cable cords and look for free or nominal alternatives. There are many ways to reduce your expense without hampering the quality of life you live.
- Talk to your family members about your monthly financial goals and ask for their recommendations to meet them. You will surprise to see how supportive and involved they will be.
- Choose cash instead of the credit cards: Many studies suggest that people are more attached to cash than their credit cards.
- Last but not the least, stop, think and ask yourself before buying anything, think whether the product you are buying is of any use to you or not?
