Tuesday, September 22, 2015

When is Spending Too Much?

While I was running up to my front door to grab something I forgot the other day, I overheard a conversation from a couple visiting one of my neighbors. They weren't my neighbors, but I'm assuming a set of grandparents. They were arguing vehemently, and the woman was saying, "I don't really spend that much" and several variations of that.

It got me thinking about how much spending is "too much". Here are a few tips to find out if you're spending too much.

  1. You hide purchases from your spouse. This is a big challenge, especially for many women who end up hiding shopping bags in their trunk, or adding all their purchases to one bag to hide it from their husband. I can tell you, he will find out eventually, and it's better to be upfront and honest about your struggle rather than hiding it from him as long as possible. The problem will only get worse.
  2. You lie about your spending. This goes along with # 1. Any lies regarding money are exponentially increasing the problem, especially via # 3.
  3. You feel guilty. Feelings of guilt can be a warning sign. Guilt and shame are dangerous emotions. The only way to get rid of these guilty feelings is to take action and be open and honest. You can't be guilty about something if you've truly confessed and repented.
  4. Your bank account is steadily decreasing. If you've always had a comfortable cushion in your bank account, but you notice that it is decreasing or you've overdrawn your account you need to sit down and figure out where the money is going sooner rather than later. If you have any revolving credit card balances that you aren't paying down every month, you need to get a spending plan in place immediately.
  5. You treat yourself because you feel like you deserve it. None of us "deserve" compulsive shopping. An occasional chocolate treat is one thing, but you don't deserve the latest brands or most expensive car or house, or even the best vacation. If you're ignoring your goals and plans in life in favor of the now, you have some serious consequences coming down the road.
  6. You don't give generously. The biggest concern I have, is when someone tells me that they don't give anything to charity. Especially when they load up the cart with $150 worth of "stuff" at Target every week. If you can afford to spend recklessly, then you can afford to give generously. I recommend 10% as a starting point, but if you've never given anything (and aren't religious), a bare "minimum" in my opinion would be providing for a child sponsorship to equal each member of your family. So, for instance, the average 4-person family would be setting aside $150-$200 a month to support 4 children in third world countries. If you think about it, that's only about one week's worth of groceries (or one unplanned Target shopping trip per month).
  7. You feel like you always want something and don't know what you have. If you are the type of person who finds unopened purchases regularly or constantly looking for something that you just purchased, you don't need to buy anything else. You may even want to start a policy of one item leaving your house for every item you purchase. Donate it to charity, sell it on craigslist or ebay, or give it away to a friend.
How do you combat these overspending problems?
  1. Volunteer among people who have very little. Seeing someone who is truly struggling can help you with your own feelings of "deservedness". 
  2. Donate your money, food, clothing, or basic needs items to a local cause in person. The in person clause is the toughest one here. Seeing where your help is going is the most important part. It's one thing to donate to a nameless charity or put a bag of food out for the mailman to pick up, but to take that step of actually bringing the needed supplies to a group or organization, or even a person, can help you see with different eyes.
  3. Confess. Whether it's to your priest, your spouse, your counselor, or your mom, you need to admit out loud to someone else that you really do have a spending problem.
  4. Set up or reanalyze your spending plan. Use a program like You Need a Budget, or create your own via an Excel spreadsheet. Get your credit card or bank statements out and find out where your money is actually going (use receipts or an envelope system if you have cash spending). Once you see how much you really spend in certain categories, determine if it lines up with your family and personal goals or not.
  5. Treat yourself by taking care of yourself - physically, mentally and emotionally. If you are feeling the need to really "treat" yourself, you should be eating whole grains, fresh fruits and veggies, and exercising regularly. You deserve good health, so cut back on sugar, keep alcohol use to one or two glasses per week, and get out for a brisk walk in nature. Your body, heart, and soul will thank you.
  6. Set up a spending limit that you must discuss with your spouse before making a purchase. We don't have a big problem with this in our house because we follow # 7, but set up a limit even for non-allowance purchases. For example, if I spent $100 on clothing without discussing whether we needed certain items or not, I imagine my husband would have a big problem with it. On the other hand, if we discuss the fact that I need two pairs of jeans and 3 shirts, and I expect to spend $75 or so, I wouldn't feel the need to call him beforehand, like I would with an unplanned shopping trip.
  7. Give yourself an allowance. In our house, we have a monthly allowance, which is also increased by large chunks occasionally through the year. This can be used in any amount as long as we have a positive balance. So, if I had something I really wanted for $200 or so, or if I wanted to surprise my husband with an unplanned purchase, I could easily do so. This helps me not feel like I "can't spend any money".
I'm sure there are many other overspending tendencies that I haven't covered in this short article. How do you feel that you overspend and how do you combat those tendencies?
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