Spending Habits 101: Top Causes of Overspending

We're only human. Sometimes, we develop bad financial habits that inconvenience our lives, especially economically. One consumer behavior that we thought to be just a one-time and harmless overspending became a problem that is now causing us tremendous financial stress.

But people overspend differently and for a variety of reasons. In this article, learn about the main masterminds of people's overspending tendencies, and how you can come up with effective money-saving strategies to put a stop to this impulsive spending.

1. Lack of financial planning

Often the culprit of overspending is the downright lack of financial planning in place to prevent it. This means recklessly spending money without regard to whether you have saved up enough for emergencies or if your paycheck will suffice for your burgeoning monthly expenses.

What you can do:

Consider setting up a savings account. You can even automate your savings plan by automatically making a portion of your paycheck go directly into your account. What's more, make sure to set a budget that will best work for you. But the first step is to make your mind up and be serious about your personal finance management.

2. Credit card abuse

If you have a credit card, chances are high that you might overspend on top of relatively high interest rates. Even though your smartphone is working perfectly fine, you may be tempted to buy a new one since you have a credit card to purchase for them right away. If anything, this is common among many consumers, so don't feel alone. Still, credit card abuse will make you overspend. In consequence, your credit card balance will increase and, if you fail to pay your dues on time, will adversely affect your credit score.

What you can do:

Pay only cash rather than resort to using your credit card repeatedly. If you don't have cash handy, take it as an opportunity to save money and avoid potential overspending.

3. Acting on impulse buying

This is most common on multiple shopping trips monthly. Grocery stores and shopping centers are full of temptations that will trigger our materialistic urges. You are supposed to just buy food items, but then you came across an aisle in the supermarket that caught your attention. And it's quite affordable, too. As a result, you now have bought something that's not part of your monthly expenses.

What you can do:

As much as possible, only do your groceries once or twice a month. This will help you avoid impulse purchases during every shopping trip. If you have kids whom you bring along every time, this is yet another helpful practice to prevent responding to your children's demands.

4. "I should have it, too" mentality

"My neighbor has a new appliance. I should buy one for us, too." Yes, this way of thinking exists and is one of the causes of overspending among Pinoys. Comparing one's financial situation to others gives birth to impulse purchases.

What you can do:

Stay focused on attaining your financial security goals slowly but surely. You can do this in part by living within your means and not letting social media posts of vacationing friends and relatives on expensive tourist destinations pressure you into following their path. You will have your time. For now, work on your goals.

5. You're too generous

You may be the type of friend or family member who finds it hard to say "no" to financial requests. Helping others is indeed fulfilling, but not until you become the one who would need to ask for money from others because you lent someone your own money. It's great to be generous but you must learn to respectfully say "no" if your current financial circumstances will be negatively impacted if you grant your friends and loved ones' money requests.

What you can do:

As mentioned, you must learn and master the art of saying "no." If they acted as though you're a bad person for refusing to grant them money that essentially does not have a full guarantee they will return on time as promised, here's some unsolicited advice: don't be afraid to cut such people off in your life.

6. Peer pressure

Indeed, it's difficult to refuse invitations from peers that involve spending money to have fun. It could be as simple as being urged to go to Starbucks after work, which is arguably fine every once in a while. But if it became habitual to the point of rendering you savings-less at the end of each month, it's plain bad. The same applies to going to restaurants and malls after being invited by friends.

What you can do:

If you can't refuse an invite, talk to your friend about your financial goals of saving more money and say that, if possible, you can avoid expensive restaurants to dine in. If your friend(s) made fun of your money confession instead of respecting your decision, you may be not in the right circle. A true friend understands another friend's struggles.

7. Acting on the lure of marketing offers

You're not really an overspender, but the lure of irresistible advertising made you one. For example, there's an offer for a gadget with 50 percent off. You don't really need it, but the discount is so significant that makes you think it's a worthwhile purchase. In the end, you took home an appliance that just sits idly inside your house, rarely used.

What you can do:

Assess your current financial situation and reflect. After all, falling for the lure of an advertisement will only make you temporarily happy. Afterward, chances are you'd regret buying stuff that you won't even use that much. Instead, shift your focus on how you can save enough money, such as cutting on energy costs and other saving hacks.

8. Special occasions

During birthdays, holidays, and even your days off from work you may have the tendency to overspend for the occasion. While occasions only happen once in a while, it is still an avenue for people to spend too much money unnecessarily.

What you can do:

If your presence and participation for a certain occasion require quite an amount of money, learn to decline invites. You may enjoy your time there, but would also end up regretting spending a substantial amount of money in just one day. Remain respectful when you decline invitations. And don't feel too bad for yourself, let alone for others.

Overspending is a bad financial practice that many of us are guilty of committing sometimes. But if it becomes a recurring phenomenon, becoming more conscious of the way we spend our money, as well as recognizing what causes these spending habits, are key to unlearning them.

What you would have used for impulse purchases can now be utilized to fund an affordable house and lot for your family.

At Lumina Homes, you can put your savings into valuable allocation for your initial down payment. The higher the amount of your down payment, the shorter the time you will have to pay for your affordable house and lot for sale.

For as low as a million pesos, you can achieve affordability and quality for your dream home. Our housing communities nationwide are fittingly located near grocery stores, shopping centers, medical facilities, universities, and more for your family's convenience. Plus, you will get to enjoy community amenities such as a gazebo, a basketball court, a multipurpose hall, and a playground for your kids, among others.

Your real estate investment is worthwhile with us. Get your own house and lot in the Philippines through Lumina Homes this 2023!