8 Ways to Avoid Common Spending Traps

Published December 2020

Whether it's trying to keep up with the Joneses or prove worth to one's self, family member, or peer, people tend to overspend. Money has become a trigger of obsession and addiction for many. 

However, you do not have to suffer from a psychological disorder to overspend. Modern society encourages consumerism, spending, and debt "by default". That may explain why 80 percent of Americans find themselves in consumer debt.

Here are some of the most common reasons for overspending, along with some tips about what you can do to avoid these debt traps. 

Impulse Shopping 

According to a 2014 mass merchant shopper engagement study, people make 76 percent of their shopping decisions in the store, as they shop. This sobering number is proof that impulse shopping has reached truly epidemic proportions. 

When you buy something on an impulse, you risk overspending. 

To avoid impulse shopping, draw up a solid, well-thought-out shopping list and budget. Use cash and only carry as much cash with you to the store as your shopping list dictates you will need to make your designated purchases. 

Letting Seemingly Insignificant Expenses Sneak up on You

Big-ticket items have a way of searing themselves into our memories due to the phenomenon experts have dubbed “the pain of paying.” 

The same cannot be said about smaller expenses like cab fare, coffee, going out with friends, etc. 

Somewhat insulated from the pain of paying, such expenses proliferate unnoticed and end up wrecking your budget. Keep tabs on all your expenditures. Ruthlessly account for every dollar you spend and include it in your budget. 

Doing so for just a short time will be an eye-opener. You will quickly discover that incidental expenses add up to big chunks of cash in short order. Once you have that realization, you'll likely be less inclined to open your wallet on a whim.

Keeping up with the Joneses

The pressure to maintain an image and project a lifestyle is real in more ways than one. 

Living above one’s means, in a fancy house, and driving a fancy vehicle, the upkeep of which one cannot afford, is the macro-level part of the problem. 

Keeping up with the Joneses.

On the micro-level, almost everyone at one time or another feels compelled to go out for drinks with friends, pick up the tab now and then, and maybe jump into a vacation that is a bit beyond budget with the gang. Peer pressure drives many to spend above their means. 

Maintaining a realistic view of your finances and your friendships can keep both in their proper place in your life. True friendships don't require massive cash inputs, so stick with spending time with your friends instead of spending money with them.

Not Having a Budget

According to Shift, almost half of American families live paycheck to paycheck, and only one in three keeps a household budget. 

If you have no idea where your money is going or how much of it you have left, how could you ever assert control over it? Being unaware of your financial situation will make it much easier to succumb to the temptation of a sale and make an unplanned purchase. 

It isn't as hard as you may think to create a budget that will work for you. There are many tools available to help you do just that. ClearOne has a number of resources to help.

Once you've created your budget, stick to it carefully, and watch your finances improve over time.

Whipping out the Plastic

As the world continues to move away from cash, this particular reason for overspending is bound to grow in the future. 

Credit cards have separated the joy of purchase from the pain of paying. When you give someone physical cash, the experience of parting with value is very real. Credit card payments, on the other hand, are distant, emotionally sterile, and rarely trigger your overspending alarm. 

Use cash whenever possible. Do not suppress your financial instincts, even if they suck the joy out of your shopping. 

If you are drowning in credit card debt already, seek debt relief now. Contact a ClearOne Certified Debt Specialist at 866-481-1597 to learn about your available debt relief options and get a free savings estimate.

Being Indebted

Your debt is costing you a lot of money. Few people can properly assess the cost of their debt and many feel that the material things they buy give them better control over their lives, boosting their self-esteem.   

Nothing could be further from the truth. By going into debt, you auction off your future. Seek credit card help now if you are having trouble making your payments. Learn what your debt relief options are and swing into action. 

Lacking Financial Literacy and Suffering from “Present Bias”

If you value instant gratification more than your future, and if you lack the foresight to invest in your future self now, you should know that you are endangering your financial preservation. 

Educate yourself and develop a healthy set of financial instincts. Shed your present bias by focusing on achievable, short-term financial goals. 

Shopping Addiction and Retail Therapy

Here is another recipe for financial disaster. Shopping addiction is an impulse-control disorder. If you happen to have a shopping addiction problem, identify where and how it started, and seek professional help. 

Retail therapy is often part of the vicious cycle of shopping addiction. Ask yourself whether the unnecessary possessions you accrue through this dubious “therapy” really do make you feel more powerful and better off. 

If your debt has ballooned out of control, it's time to take action to find credit card relief and get out of debt. Stop the cycle of overspending and take steps to gain your financial freedom. Contact a ClearOne Certified Debt Specialist at 866-481-1597 to get a free savings estimate today.

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Topics: Financial Education