Spending is just a part of daily living but while spending is normal, it’s also important not to forget the number one rule of financial freedom which is spending less than you earn.
Spending more than you earn leads to accruing debts and saving too little for a rainy day. You would never be financially successful no matter how hard you work if you keep spending more than you earn.
Here are 7 reasons why people spend more than they earn
1. INABILITY TO SAY NO
If you can’t say no to some requests, you would definitely end up spending more than you earn. Some people feel like failures when they can’t meet the needs of others. This makes them spend more than they earn. Learn to say no when you can’t afford some expenses.
2. SPENDING MONEY MAKES THEM FEEL GOOD
Some people like to spend money simply because it makes them happy and this habit leads to them spending more than they earn. If you find yourself spending recklessly when you are sad or upset, you may want to rethink your habits.
3. KEEPING UP WITH THE JONESES’
Some people just want to feel as successful or even more successful than their neighbours or peers and this leads them to spending more than they earn. To keep up with peers and maintain the ‘I am very successful image’, a lot of money would be spent. Learn to be content with what you have.
4. CREDIT CARDS MAKE SPENDING EASY
Having a credit card isn’t bad; it in fact makes things easy for us. Credit cards also come with their own problems which is making people spend more money than they actually have. Learn not to take your credit cards out unless it’s a serious emergency because several studies have shown that people are more likely to spend more when using credit cards than when using cash.
5. SPENDING GIVES THEM A SENSE OF POWER
Some people feel powerful when they spend big. The more they spend, the more powerful they feel. The problem with this habit is that you quickly and easily spend more than you actually earn.
6. IGNORANCE
Some people spend more than they actually earn because they don’t keep track of their bank accounts. When you have no idea of your bank balance, it becomes really easy to spend recklessly.
7. SPENDING MONEY BEFORE YOU RECEIVE IT
This is another habit that can lead to you spending more than you earn. Some people have the habit of counting the chickens before they hatch. You are likely to spend more than you earn when you become too optimistic about an incoming money and spend it before you actually receive it.
Are you spending more than you actually earn?
Jake