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4 Reasons We Overspend (and How to Overcome Them)

By Azura Credit Union

We’ve all been there. Maybe it’s that I-gotta-have-it urge that overtakes us when we see a pair of designer jeans. Maybe it’s that shrug as we reach for the $6 cup of coffee that says “I deserve this.” Or maybe it’s that helpless feeling as the end of the month draws near and we realize we’ve outspent our budget — again.

What makes us overspend? Let’s take a look at four common reasons and how we can overcome them.


1. To keep up with the Joneses

When people who seem to be in the same financial bracket as we are can seemingly afford another pair of designer shoes for each outfit, we should be able to afford them, too, right?

Break the cycle: Learn to ignore how your friends and/or peers choose to spend their money and develop a self-image that is independent of material possessions. Let the Joneses keep up with you!

2. We don’t have a budget

When all of our spending is just a guessing game, it can be challenging not to overspend. Find out how Azura can help you build your budget.

Break the cycle: Create and stick to a monthly budget that covers all of your needs and some of your wants. The 50/30/20 Rule is a simple, practical rule of thumb for individuals who want a budget that's easy and effective. It offers guidelines for enjoying your income while putting savings on autopilot.

3. To get a rush

Research shows that shopping and spending money releases feel-good dopamine in the brain, which can be exciting and addicting.

Break the cycle: There’s nothing wrong with spending money to feel good, so long as you don’t go overboard. Try putting some “just for fun” money into your budget so you can make that feel-good purchase when you need to do so without letting it put you into debt.

4. Misuse of credit

Using credit cards can open up big possibilities, but it can also leave you owing more than something is worth or in a position where you're struggling to pay back what you borrowed.  Research shows that consumers spend up to 18% more when they pay with plastic over cash.

Break the cycle: When shopping in places you tend to overspend, use cash and you’ll be forced to stick to your budget. You can also use a debit card with a careful budget so you know how much you can responsibly spend. When using your credit card, try to keep your debt to income ratio (DTI) below 28%. To find your current DTI, add up how much you pay each month in debt payments and divide it by your gross monthly income. 


Before giving into indulgences that can result in overwhelming debt, create a plan for reaching your long term goals through small, measurable steps to remind yourself of how much longer your timeframe will need to be if you spend this money now. Find out how Azura can help you develop your long term goals.


Tags: Living Above and Beyond, Savings and Budget