If you find yourself over your head with bills and just can’t seem to get out of the hole, it could be because of your overspending habits.
Of course, there are always going to be issues like a health related crisis or losing a job that puts you in dire financial straits. Yet, overspending does not put you in a position to rebound in case of an emergency.
The first thing to do is to get your finances in order. Get payday loans online to get you through the month and then try to cut back on your spending. Understanding the reasons you spend too much money will help you get back on your feet faster so you can start putting money towards an emergency fund.
In this article, I will go over the ways you are spending beyond your means and how to stop it.
1 – Averse to delayed rewards
This is something like always falling back on immediate gratification. It is an impatience that has you seek the immediate solution to a problem that would be better solved by waiting.
Think of it like being on a diet and feeling hungry. When you cut back on your portions, you will naturally crave food. The analogy then is that you have one of these hunger pangs on the way home from work and hit the drive through at Burger King instead of waiting to get home to eat.
Just by waiting a little longer and delaying the reward, in this case a satisfied belly, you could have avoided falling off the diet wagon. The same goes for spending. You sometimes have to wait until you have enough of an emergency fund before you can treat yourself to something you don’t really need.
2 – Fear of missing out (FOMO)
Advertisers are really good at creating this fear that you are going to miss out on something. They tap into the idea of scarcity and that if you don’t spend now you will miss your chance at getting it.
Sometimes you aren’t even in the market for the product being advertised, but your interest is piqued when you see that there is a “Limited Time Only Sale”. Keep in mind that there is no shortage of stuff out there and a sale will often be repeated so you can wait to buy. Especially if it is not something you have to have right away.
3 – Sunk cost fallacy
This is just a modern way to say what your Grandmother used to when she would proclaim that you’re “throwing bad money after good”. This means that you spent money on something that can’t be recovered and you keep spending money to make sure that you didn’t waste it.
An example is when you sign up for a gym and incur a hefty sign up fee. You stop going to the gym but keep paying the monthly membership so you don’t feel like you wasted the sign up fee for nothing.
Sometimes you have to accept that the money was wasted and move on.