Defeat Overspending Triggers

Most people don't realize how closely emotions affect financial spending, which can lead to poor decisions and overspending. But knowing potential triggers can help you overcome them in the future.

Even financially savvy individuals can let their budget get out of control in certain circumstances. Most people don’t realize how closely emotions affect financial spending, which can lead to poor decisions and overspending.

Staying on budget can be difficult, even for people who have a plan—although, most people haven’t put one in place at all. But, by knowing potential triggers that will cause people to through caution to the wind and damage their financial health, hopefully, you can overcome them in the future.

1. You’re bored/in a bad mood

Moods can greatly affect spending, and spending greatly affects mood. For instance, a study from the University of Michigan found that people felt better if they made a purchase after watching a movie clip portraying bulling. However, the immediate rush of satisfaction will eventually wear off — but the financial damage will be done.

Plus, the internet makes it easier than ever to fill downtime by shopping. The reason bored people shop is because they know the excitement they will get from making a purchase.

The best way to combat this simple overspending trigger is by preparing for leisure time and filling it with other activities that will keep you engaged without costing you money.

2. You’ve learned it from family

We learn our financial behaviors from family and friends. Parents who overspend are teaching their children to do the same. Typically, we want what the people we looked up to have, so we adopt their attitudes and copy their behaviors. Sometimes, this ends up sabotaging our own finances.

The best way to adopt healthy spending habits is by picking new role models. Find friends and family members who have smarter financial attitudes and try to emulate them. And let someone know that you are trying to do better with your spending — you’ll be more likely to stick to the plan if there’s accountability.

3. You scored a “deal”

Few people can resist a good deal. Maybe you normally wouldn’t have bought that new jacket, but now it is hard to resist when the item in question now costs $70 instead of $150.

However, all this “deal” really did was make you spend money on something you don’t need and otherwise wouldn’t have purchased. Before going shopping, make a list of everything you need and stick to it to avoid unnecessary splurges.

Before heading to the register, really pause and think about what you’re buying. Focus on what you’ll be spending and not what you’ll be saving. By putting it into perspective, you might think twice before buying something unplanned.

4. You’ve received unexpected cash

Few people receive a refund, bonus, or lump sum of money and save it all. Mostly, that money is spent as a celebration for simply receiving it. Even large sums of money can get spent quicker than expected — take a look at lottery winners and retired professional athletes who go broke.

Financially savvy individuals will put that money to work by investing it or will simply sock it away for a rainy day.

Since a sudden windfall isn’t planned, it can be difficult to prepare for one. However, once you receive the money, but before you spend a dime, create a plan for what to do with it, so you can be sure you’re spending it or saving it wisely.

5. You’re trying to “keep up with the Joneses”

They may be your neighbors or your siblings or your friends, but everyone knows someone who lives a lavish lifestyle that they want to live. This sort of mentality often leads to people spending more than they should — or, worse, spending more than they earn.

Just going out to dinner with friends can trigger overspending behaviors because of peer pressure. It’s hard not to order drinks when all of your friends are doing so. To avoid overspending in this situation, decide on how much you’ll spend ahead of time so you don’t get carried away. Even better, stick to paying with cash, not a credit card, so you won’t be able to spend more money than is in your wallet.

6. You’re on vacation

Vacations are expensive enough considering the price of airfare and hotels, but many people tend not to take into account all the extra costs, like excursions and shopping and spa treatments. Why not go to a fancy restaurant? You’re only in town once, after all.

But this attitude can cause sticker shock to set in once you return home. In particular, travelers overseas need to take into account currency differences. A dinner for 2 that costs 100 euros is really $130, and might be more than you wanted to spend.

Pick your restaurants and activities before you step foot on the plane. Not only will you have an idea of the costs in advance, but your time will be booked enough that there won’t be much left for last-minute splurges.

7. You’re celebrating

Whether you’re spending money on yourself or on someone else, splurging for the sake of celebrating can add up fast. People often feel compelled to spend more on loved ones at birthdays, bar mitzvahs, weddings, etc., not only because of feelings of affection, but because no one wants to spend less than everyone else.

The big events that people want to splurge on are typically ones we know about well in advance, which gives us a lot of time to start saving small amounts until it adds up.