Understanding your motivation for spending too much money is the first step toward taking control of your finances.
Most people never take the time to evaluate why they spend money. While the following is not a comprehensive list, if you recognize yourself among the following common bad spending habits, you can take the first step to bringing overspending under control:
Can't buy happiness
: This is an easy trap to fall into, since most advertising goes to great lengths to associate a product with happiness. You purchase things believing that doing so will make your life better. While the purchase itself may give you pleasure, the feeling is fleeting. You will have to purchase something else to find more "happiness."
Lack of patience
: Some people want instant gratification. They see something and they want it immediately, regardless of whether they have the money to afford it. They lack the patience to wait even a short amount of time, and therefore they spend even when they don't have the money available to cover the purchase.
: A lot of people purchase items to compensate for feelings of guilt. It may be that you can't spend enough time with your children, so you try to make up for it by buying them gifts.
Can't buy love, either
: "A diamond is forever," but it also costs a lot of money. There is a constant barrage of commercials that equate spending money on your partner to love. If you feel that the only way to show your love is through material objects, you will spend vast amounts of money trying -- even when you may not be able to afford it.
Keeping up with the Joneses
: Spending to bolster your image is dangerous. In many cases, the Joneses are doing the exact same thing to keep up with you.
Not being able to say "no"
: Some people have a hard time dealing with any type of confrontation. Whether it's kids who want the newest fashions, a spouse who wants the latest gadget or friends who ask to borrow money, these folks simply can't say "no," even when they don't have the money.
: Often it is hard to admit to friends that you don't have the money to do certain activities, so you instead go along and pay for things that you can't afford. Maybe it's a monthly dinner at a fancy restaurant, or constant gifts. Instead of admitting that you can't afford it, you continue to participate because of shame.
: Some people spend too much simply because they're lazy. Instead of doing the necessary research, looking for deals and spending their money wisely, they pay much too much for things -- and often, it isn't even exactly what they want.
"Things will get better"
: Even though they don't have it at the moment, some people spend with the expectation they will have more money soon. Maybe they're banking on a raise or a bonus from work. They're sure more money will be available next month, so they go ahead and purchase something they can't yet pay for. But if the bonus or raise doesn't work out quite as expected, there will be a lot of debt to account for.
Just charge it
: Some people who don't have the cash in their hand don't see credit cards as real money. Why should they? They can buy something and only have to pay 3% each month back to the credit card company. This, of course, can get you into a lot of financial trouble, since eventually it all needs to be paid back -- with interest.
: People can leave the workforce, lose a job or even go through bankruptcy but continue to spend as they had before. They are going to run into financial problems, since their new situation can't support their old habits.
: Some people shop because they believe they deserve things, even if they don't have the money. The reasons someone might feel a sense of entitlement can be numerous. Maybe they were poor growing up, or they scrimped and scraped through college and now have their first job. Whatever the reason, feeling entitled to something you don't have the money for will cause a lot of financial distress.
Lack of knowledge
: Some people simply don't understand how finances work. They believe that if they have qualified for a credit card with a $20,000 spending limit, then they can max it out. Not understanding the true costs of different financial instruments can have a huge negative effect on your finances.
: Some people spend money to feel powerful. Being able to carry around large amounts of cash and purchase expensive items on a credit card is a boost to their ego, even if they really don't have the money to pay for it.
: Some people equate the things they buy with their self-worth. In order for them to feel good about themselves, they need to spend money, even if they don't have it.
These are just a few reasons behind overspending -- some people are motivated by a combination of several. Whatever your reasons, understanding the motivating forces behind overspending can help you address the issue and turn your financial life around.
Jeffrey Strain has been a freelance personal finance writer for the past 10 years helping people save money and get their finances in order. He currently owns and runs SavingAdvice.com.