I'm not asking why you've gotten yourself into debt, or why everything costs so much. Those are obvious answers. No, I'm asking why, how and what is the root cause for overspending and causing you anxiety about following a budget? What is the reason behind you being in debt?
There could be a number of personal reasons and once you pinpoint these reasons or triggers for overspending, you can see where it might be going wrong, see where things can be changed and what you can do to spend less.
There is a reason for the way you spend... and you are probably the reason. I know it sounds harsh but there are things within our money behaviour that cause us to feel anxiety about our finances. Money is only 20% math, the other 80% is behaviour. We cannot change math but we are capable of looking at the other 80% to make vast improvements with money.
After observing how all sorts of people live, earn and spend, I've noticed it comes down to a few simple and obvious reasons. Society has a tremendous influence on the way we live, earn and spend. We work like crazy to get the things we want. But are you really getting what you 'want' in life? Why do you want it?
Discover and find out what you 'need' instead, in order to find the balance and happiness.
We all want that emotional state of feeling content, not stress! Even if it means going without some things that you 'want' in order to balance your finances. As ultimately this will get you out of a cycle that makes you overspend. Even if it's simply to get you out of the thought process that things will make you happy when you're actually missing out on what's really important.
I don't need to explain the difference between Want and Need. When you hear and think of them together (always keeping them in mind) it can help to stop overspending, go through and prioritise your income with each pay that comes in. Once you sort it all out, you can actually have your cake and eat it too.
First thing, is to find your values and what enriches your life in order to find what is important to you. Then what your spending priorities are. Do you overspend because of any following causes getting in the way?
FAMILY MONEY STORY
We all have it. What we saw, heard and lived growing up. How you lived and saw things as a child has shaped and influenced how you spend money as an adult, in one way or another.
Maybe you saw huge amounts of money spent and continued that lifestyle, living beyond your means until you found yourself in debt. Or the opposite outcome; you grew up spending above your income because you didn't get much as a child.
You may have seen one parent take control of all finances leaving the other parent going along with it all, and now you would like to do the same because you see how both can benefit (This is only ok if you and your partner are on the same page, understand it all and trust it being handled by only one person for everyone's benefit).
All of these scenarios shape us and our way of spending as adults. Whether your family spent very little, were frugal and you learned from this or not, you need to understand the way it works;
THE OUTCOME OF YOUR INCOME.
Advertising in our society! It's everywhere and in front of us everyday. They like to tell us what we 'need'. "This product will make you happier" , 'This will make your life easier" or "You need this" but unless it makes my life easier and I can save money by purchasing the said item, I'm not interested!
Buying products only makes us happier momentarily. It doesn't really fill the void, does it? The 'void' being the reason why we feel we need that product. Companies want you to buy their products and are really good at making you think you deserve it.
By letting yourself fall for or buy into consumerism (pun intended), you will constantly be chasing the next great item. If you want to treat yourself to something, try to make it rare occasion or source it cheaper. Buy it second-hand, find it online, just don't pay retail price. Get smarter. Buy clearance items. Look for sales and where you can save money, not throw it away.
Its not really about will power, but more about education and awareness! Use these and your values to drive your spending instead of listening to marketing tactics. Work out for yourself if you need it or if it just sounds like a good idea.
EGO, THE JONES' SYNDROME
Are you spending more than you're bringing in, to fit in?
To boost yourself up?
To make your status known?
Just because your friend updated their car, doesn't mean you also need to. Although it's a natural thought to also want nice new things but do you really need it yet? Are you able to afford it? Are you going to put yourself under more pressure to earn more money to cover the extra expense?
Each person and couple are different. Don't feel pressured to keep up. Holidays are more fun anyway, put it towards memories or something that will make your life better for the long term.
If you discover this is a reason for overspending, ask yourself more questions. Why am I doing this? Why do I care what others think of my things? Low self esteem or ego can be simple reasons?
Self enamored behaviour may be leading towards an unrealistic lifestyle. Is it making you happy or just causing you more stress in the long run trying to keep up but sinking into debt?
Live to your means and don't self sabotage your earnings by spending according to others. It's your life not theirs! Who cares what anyone thinks of your things.
A great book recommendation
LACK OF PLANNING
Sometimes, it's as simple as planning. By thinking ahead, you can plan for the future, horrible bills AND the special things like goals.
Just planning only a month ahead can make a difference. A little bit of thinking and planning for future spending is essential. It's the main element of budgeting. You can read about this in the next article 'Manage your economy easily'.
If you know (and you need to) when your bills are due next, you will know how much disposable income you have from pay to pay. You will know exactly if you can afford something extra or put it away as savings for something else you've planned for.
By planning ahead, you are constantly aware of how you spend, the frequency of payments due and where on earth it all goes. You can't get anywhere without a plan.
Planning allows us to set and work towards goals we have. If you fail in planning ahead you will find it difficult to achieve goals.
Think of what you could achieve if you planned not only months ahead but years ahead! https://www.thedomesticeconomy.com/2017/10/14/manage-your-economy-easily/
NOT WORKING TOGETHER AS
Finances shared between a couple can run well or not so well. Money can be a major source of arguments and constant issues between a couple.
Take charge of your income and money! You earn it, and you spend it.
Work together with your partner to plan how the two incomes will be distributed to fairly pay for not only all household expenses but goals as a couple.
Keeping some income for yourselves will allow you to work towards your own goals and savings, or spending money for yourself or the family. It is a bit unfair if only one partner is controlling the money. This creates control within the relationship and will fester as a problem especially if you haven't decided what financial goals you both have, personally and together.
If you can work towards both goals or even just one at a time, both of you will feel you've earned it. Compromise, this is much more equal.
If only one partner wants a family holiday and the other wants something for themselves, they need their own portion of income to achieve both. You can't achieve it all without being on the same page as your partner. One person utilising both incomes is controlling and not very healthy for the relationship.
Both partners need to discuss and decide on all household expenses together and who is responsible for which. This will avoid blame and arguments if anything is out of balance because you have both been responsible for the decision to begin with. This simple couple agreement blocks the gaps where resentment can seep in if blame kicks in.
I think this reason is obvious. If you cannot afford to live because of an addiction eating your income up, you need to recognise this as the problem and address it. If you don't, nothing will change.
If you really want to change, you can. Only you can decide to change it though. This may take years of trying, but finances for the essentials to live are one reward of stopping, preventing further destruction. Just by quitting cigarettes for example, you can use that money to pay for something else that will make you happier if able to address it.
There are many addictions that rely on finances and cause harm to your health, possibly requiring more expense. Cigarettes, drugs, alcohol, shopping and gambling are all a problem. Many organisations are out there to reach out to for help with your addiction before you can even sort out your finances.
Search the relevant organisations to seek help within your community.
INCOME TOO LOW
To solve a problem like income, we need to find our own solution or continue going around in circles with continued debt and always living behind. Sometimes having an income crisis though is the kick you need to assess your finances and solve the issues that might stop you from working more or getting a better job.
Do you have a hobby that can earn some side income? Can you start a small business providing a service for people? Creating your own side income instead of getting another job is easier as you can choose your own hours to work outside your day job. Sometimes it might be worth gaining some extra skills by doing courses or degrees for a better career, both interesting and pays well. Don’t wait around in the hope of ‘one day’ as that day may never come. Go and get what you need yourself because the best investment you can make is in you. Maybe now is the time to follow a passion and you need to fund some further schooling without going into debt?
Mostly it comes from a caring and loving place but sometimes we can feel like people are over stepping our line, interfering with our decisions and plans to move forward. We can do too much for others to be nice or avoid confrontation but eventually feel like we’re neglecting our own needs. It is hard to say no when we want to help but there needs to be a defined boundary by limiting how much of yourself you can give.
If your scales are tipped and you feel like screaming ‘NO’ and putting your hand up to stop someone coming at you, demanding, begging or bullying, it’s a good indication you probably need to set some personal or financial boundaries with others to protect yourself. This will stop others controlling our life or doubting our ability to be responsible with money. You are in control of your own life and only you get to decide if a decision is fair if you’re involved.
If you think someone is taking advantage of your generosity but it’s causing you financial hardship, you might need to address this with them and lovingly let them know they need to be responsible for their own finances now as you also need to take care of your own. You’re enabling bad behaviour by allowing it to continue if you do not use boundaries to protect yourself and your money.
I hope this article has helped to highlight any causes if you've been overspending.
It is now up to you to research and work on any highlighted areas so you're free to manage your money well.
Once these areas are addressed you will be able to create a budget for your domestic economy.