Overspending: Why do we do it?

Spending money is a snap! All you need is a credit card and you’re off to the destructive habit of over-spending . . . or living beyond your means.  If you have access to an ATM machine, overspending is even easier.

With these two modern banking conveniences, you can buy things 24 hours a day. Add online stores like Amazon and you can literally shop and spend throughout the night . . . on your computer and in your P.J.s.

Easy access to online storefronts, quick cash and credit can be convenient; but costly. Convenience is rarely free of charge. Credit on plastic cards and ATM bucks all come with hefty fees, adding to the price of everything your purchase. Both conveniences loosen the purse strings by creating the illusion that you can afford anything, anytime, anywhere.

If you reserve ATM withdrawals for emergencies and pay your credit card bills on time each month, such banking amenities can make your life easier. You save yourself the hassle of writing checks or counting out cash. However, if your credit card balances carry over at high interest rates and you stop at an ATM every time you pass one, you add unnecessary expenses to every purchase you make.

If credit card balances carry over at high interest rates and you stop at an ATM every time you pass one, you add to the cost every purchase you make.

Some people go for years making only minimum payments on their charge cards and accumulating fees freely on their ATM accounts until they’re thousands of dollars in debt. Their purchases are consumed, worn out or outdated before they pay for them. Why are they so foolish? Psychologists blame on a half-dozen or so weaknesses in human behavior:

  1. Bending to peer pressure, or desire to keep up with the Joneses.
  2. Getting a high by buying something new, often known as “feel-good spending.”
  3. Failing to set financial goals for important purchases like homes or kids’ education.
  4. Neglecting to live by a budget that designates the place for every dollar that comes in.
  5. Not being able to delay gratification (I want it now! I’ve got to have everything right away).
  6. Catering to kids’ demands or others’ expectations. (Why don’t we have a big screen TV)?

On the road to financial success, there are many pot holes; a few put there by others, many dug up by ourselves. Recognize the dents and dings those craters are causing in your cash flow and don’t let them stop you building wealth.

Manage Your Money . . . financial tips from:

AAM Fee-Only Financial Planning & Investment Advisory LLC              

Follow our blog: aamllc.com                          

Ronald Van Surksum, CFP                   

4555 Wilson Ave SW – Suite 2               Grandville, MI 49418                            

rvansurksum@aamllc.com      

Phone: (616) 531-5220                             Cell: (616) 450-8439                               

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