Overspending is one of the main reasons why many individuals have financial difficulties despite having above adequate salaries. People live from month to month with nothing to fall back on in case of job loss.
An individual can walk into a store intending to purchase a packet of milk only to leave with three bags of shopping. If their income is barely enough, this creates a deficit elsewhere that starts to build up. This kind of lifestyle perpetuates a myth that one will catch up with their debt in the future which keeps one in the same situation over and over again. It is one of the reasons why Singaporeans have challenges with managing their finances despite drawing a decent salary.
But why do people spend more than they earn yet they know they fall in debt and then the quality of their life will plummet?
A personal or home is a financial plan of how one intends to allocate income. Most people operate without a budget. They view budgets like a strait jacket that forces them to operate in a kind of way. Budgets are meant to help individuals plan and stick to their limits as well as saving for future projects emergencies.
It makes no economic sense when young couplestrying to start a family getting into debt by taking big loans to cover for huge weddings celebrations. If the finances allow, it is joyous to have a pompous fete. However, if the finances are limited, nobody will die if the family hosts a simple ceremony for friends family. Other celebrations like birthdays, festive seasons or even job promotions fall in this category.
Buying of gifts can also get out of hand especially if not well planned. Planning and early shopping ensure that they do get caught unprepared.
In order to avoid problems, allocate and stick to spending limits for gifts. Window shop for the best deals in different stores or even get items custom made where applicable. This will minimize costs without taking away the fun during the festivities.
Keeping up with the Joneses
There is a tendency for people to purchase or do things because of status or because others are doing it. They want to keep up appearances with the latest trends in technology, homes, cars and even the kind of schools they take their children. They can even go to the extent of taking loans to maintain a lifestyle which makes it extremely difficult to save and have healthy financial status.
An individual cannot be defined by material possessions. In addition, every individual must have their own objectives and a plan for their lives. ‘Keeping up with the Joneses” is a vicious cycle that gives only temporary fulfillment.
Before purchasing an item one must look inside themselves and ask why they want or need the item and whether it is within your projected budget.
Everybody is looking for a great bargain and will buy items just because they are on sale. But people must stop and ask themselves whether what they are getting into is a good deal when buying items that are on sale. They do not need it and will buy it just because it is on sale. It sounds like a deal because there is a 10% or 20% off. But chances are that the item may never be used and the buyer will regret the minute they get home. People with this weakness have houses full of useless clutter that they have never used.
In order to avoid such impulsive purchases, one must only look out for items that they actually need. Prepare a list of things that you desire in a note book. Remind yourself every time there is a sale if the items that you are looking out for. If the temptation starts to overwhelm you walk away and promise yourself to come back the following day so that you have time to reconsider whether you actually need the item.
There is absolutely no problem to have a reasonable splurge as long as it fits your budget It only becomes a problem when but if they are not within your means or start to become too frequent to justify.
Are you one of these people as well? Please know that it is not healthy for your wallet and financial health if you keep up with that. It may lead you into a spiral of debts. To avoid these, you should look at how you can restart your financial status.
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