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FAST FACT

Each year approximately half of billions dollars is spent on bubble gum by the kids in North America.

Why is middle class Overspending?

Personal credit card debt doubled in the past four years. Personal bankruptcies are at the highest rates ever. Many American families do not have savings, and a median family has less than $10,000 in assets. Average person’s spending increased about 30% in the last 25 years. That’s on top of the fact that average work hours have risen about 10% in 25 years.

Something must be wrong with this picture! We are working more, spending even more, and, according to polls, still not happy.

According to researches, it’s the Middle class that’s spending well beyond its means. In the 1980’s—1990’s, the middle class was acquiring rapidly. More rapidly than ever before. That’s when trouble started. It’s an example of a slippery-slope. First, middle class was spending the money it was acquiring, now it’s spending the money that it doesn’t even have. But why can’t we stop spending money? Are we addicted to spending money? Or do we not see an over-spending problem? Or is it peer pressure to spend money? Or is something making us spend money? Why are we spending money? What are we buying?

Media plays a major role in our lives. Let’s see what the media teaches and shows us. Remember those times “Roseanne” and “Married with Children” were on TV? They portrayed every day lives of American families. What is on TV nowadays? “Friends” and “Sex in the City” are. But are they showing the reality of life? Not!

It was estimated that an average journalist wouldn’t be able to live in New York City, go to all the restaurants Kerry goes to, and afford her clothes. Media overestimates, and we, as a result, overspend. We want to live the lives we see on TV since we think we can compare, but we simply can’t. It’s not financially reasonable.

Shows about lavish lives on celebrities, celebrity weddings, and celebrity houses were also products of the past years. We get to walk in their shoes for a minute, make comparisons, and dream of the same style of living.

I’m sure you’ve seen a lot of commercials on TV since they are simply there. If you take a closer look, a lot of them are not too informative, but rather talk about how a certain product would make us feel.

We are being manipulated and we fall for it! Actually, according to one study, people spend an extra $208 annually for every hour of TV they watched each week.

In addition to falling in traps of the media, comparing yourself to people whose incomes are well beyond yours is also dangerous. We have to accept who we are and what we can and cannot afford. It seems that a lot of Americans tie their spending to their identity. By driving a certain car, having a certain house, and wearing certain labels, they create an image of themselves that they have to support, and that’s hard to do when that is not really who you are.

The funny thing is that people are still not happy with what they have. Actually, there seems to be a problem with distinguishing two different concepts – “wants” and “needs”. Half of the population of the United States of America, the richest country in the world, says they can’t afford everything they need. Come on, people! Expensive clothing labels, lavish houses, cool cars, and upper-end restaurants are not “needs”! We can afford more than many countries’ citizens can only dream about, and we are still not happy. This must not be about money. This must be about using money to fix other problems we have. Money lets us buy the things we need and want, but it does not bring happiness.

Are you personally living beyond your means? Are you spending more than you can afford? Are you spending more than you want to? Are you spending more than you realize? Are you buying things you never use? Do you have credit card debt? Are you in or near bankruptcy? Do you not have savings?

If you answered “yes” to the above questions, you might want to take a look at the reasons psychologists have identified for overspending, and find the one pertaining to you:
1—Stress Relief
2—Pleasure
3—Entitlement
4—Overcoming feelings of inadequacy
5—Demonstrating our own importance

Have you noticed that none of them have to do with your “needs” but rather appeal to your emotions?

Now that we can separate “needs” and “wants”, here are 10 Tips you might use you control your cravings for “wants” and stop overspending:

Tip #1 to stopping Overspending

Instead of making an impulse buying decision, allow yourself a 24 hr cooling-off period.

Tip #2 to stopping Overspending

If you haven’t worn something you bought a month ago, chances are you’ll never wear it. So, just return it.

Tip #3 to stopping Overspending

Pay cash instead of credit cards. Studies have shown that you will be less likely to buy with cash.

Tip #4 to stopping Overspending

When it comes to gifts and numerous events you are invited to, don’t feel obligated to go every time you are invited. If you don’t have money, don’t go!

Tip #5 to stopping Overspending

Contribute towards a group gift whenever possible.

Tip #6 to stopping Overspending

Don’t underestimate the dollar. It really piles up throughout the year. Drinking coffee at home instead of daily Starbucks coffee and bringing lunch from home instead of going out for lunch every day, will save you a grand a year.

Tip #7 to stopping Overspending

Keep track of your spendings. You must know and understand where your money is going. Every day spending decisions have a greater impact on your financial future than any investment decision you might make.

Tip #8 to stopping Overspending

Don’t accumulate any more credit cards, even if there is zero-percent financing.

Tip #9 to stopping Overspending

Pay yourself first. That is, before you make any spendings, put money that you want to save for yourself (whether for short-term goals or long-term goals), aside. After all, you are the one who is working. You are paying everyone else. You can afford to pay yourself!

Tip #10 to stopping Overspending

Last but not least. Remember that money or lack thereof doesn’t determine who you are. We’ve all met relatively poor people who seemed happier than some of the richest people we know.

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