Overspending is toxic for your financial health; here's how you can stop it

Certain things are not taught but are innate. Overspending is one such habit. Nobody teaches you how to overspend, on the other hand very few teach you how to spend money wisely. Before we head to how to curb the urge for overspending, one should know why is it necessary or how overspending is bad.

Don’t spend on unnecessary things

Like the old man says “Paise jhad pe nahi ugte” (Money does not grow on trees) although metaphoric, the statement actually makes you learn the value of the efforts required to earn it. Be it 9 to 5 job or stressful business meeting, everyone knows, the hard work behind earning it. Now since we know how hard it is to earn, is it really wise to spend it on unnecessary things?

Hits your emergency corpus

Overspending massively hits savings and sometime your emergency fund as well. Overspending always happens when you breach your fixed expenses barrier. Sample this: Imagine your friend or a colleague buying the latest iPhone on its launch date and to make that purchase he has to dive into his contingency corpus.

Unwanted debt

Overspending  creates unwanted debt, especially when you do not have enough cash reserves. The urge is so hard to overcome, that we often fall prey to credit card or personal loan debts. Not only are these loans very expensive in terms of interest rate, they also hit your CIBIL scores if not paid on time. If this urge is controlled timely, you won’t save just money but do a huge favor to your credit history.

Going back to my earlier phrase of nobody teaches you overspending, that means you are either a born saver or a born spender. Human psychology suggest, spending habits are often determined by the upbringing of the child. Parental habits often determine how their kid’s spending habit will structure; therefore, a parent reader take due note of it. Here’s how you can curb this urge and save at least thousands if not millions:

Be sentimental about your money

One of the glaring differences between a born spender and a born saver is the habit of born saver to not to spend even a single penny recklessly. Savers always have tough time to depart from their money even if it is for their basic necessities. The reason for such rigid expense averse behavior is their emotional connect with their hard-earned money and the pinch like feel while spending it. Even if you can attain half of what they feel, your objective is achieved and also you are saved from being called as paranoid.

Every expense counts

every expense counts, even if it is as small as your habit of drinking coffee daily at your favorite coffee house. Over-spenders are often under the misunderstanding that only big cars or lavish houses contribute towards overspending. However little expenses matter too, if they are consistent.

Spend wisely

Spend on things which add purpose to your life, not because such spends give you instant gratification. A personal opinion, being a football lover, I would give up on expensive phones and watches and save everything I have just to watch a live Football match once in my lifetime. However, If you ask a non-football fan about this idea they may consider me a fool.

Automate your savings

Automate Savings, because you cannot spend when you don’t have money. Over-spender as a specie never believe in the word savings, let alone acting on it. The reason being their urge to spend is so high, that they actually have their expenses lined up even before the salary hit their bank accounts. Their online shopping cart are always over flowing along with their bucket list and let us not even go to their social media accounts which has so many unfulfilled dreams.

So, in such scenario if we can automate our savings, and through Investment may be a SIP mandate or any other useful tool, wherein on the day of paycheck receipt the Investment would be automatically deducted and only thing remaining shall be money for enjoyment.

Over-spenders may have got a lot of stick in this article, however they also have many advantages over born savers, such as quick decision-making ability, living a fun life (though unplanned) and ability to steer from being debt ridden to being debt free. It is not always advisable to be a saver only for life, however a balancing act between a spender and saver is where you achieve the optimum personal financial plan along with stress free life which may occur on account of overspending.