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Breaking the Paycheck to Paycheck Cycle: Why You Overspend

Living paycheck to paycheck is a vicious cycle that plays around with your stress levels and anxiety. It makes you feel hopeless. It takes your motivation away just days before payday. But before you can understand how to get yourself out of the rut, you need to know why you’re in it first.

People live paycheck to paycheck because of overspending.

Now, overspending isn’t entirely your fault. You can’t solely blame yourself for being in this situation. There are other factors that make people spend more than they should:

Tricked by marketers

Sales lead to overspending

A lot of retailers execute marketing strategies to get people to spend more. Last week, we published an article on how supermarkets trick people to spend more. Fashion stores use big flashy “SALE” signs to encourage you to buy something you don’t need. They also use “Limited Time Only” or “Seasonal Reductions” signs to trigger a sense of urgency, making you feel like you’re missing out. When it comes to high-end and luxury brands, a study found that salespeople will make you feel like you don’t belong to push you to buy an expensive item to prove them wrong. It’s really all a marketing trick.

Pressured by society

We get pressured by society's expectations on what things we should have.

Some of us overspend because of social pressure. As human beings, we engage in cooperative and competitive behaviours, which is also present in the way we spend. To cooperate within their community or to prove they’re better than their neighbours, some fall into the traps of social pressure by buying more expensive clothes, getting an expensive car, or buying an expensive house in a certain suburb. This social pressure forces us to put on a show, keeping our bank blank. It’s literally the adult version of the “popular kids” in high school.

Illusioned by convenience

Tap and go culture has created an illusion that money doesn't deplete.

The convenience of paying has also led to the convenience of overspending. This is because cash evokes pain when you see it physically reduce. Without the pain of paying, debit and credit cards have created this illusion that there’s more money that one actually has. The emergence of digital “buy now, pay later” schemes have also caused people to think they could afford items worth more than their disposable income. In fact, ASIC found that 1 of 6 younger adults have overdrawn accounts or delayed bills because of these digital payment schemes.

The good news is that Frollo can help you stick to your budget and track your expenses so you can avoid overspending. With these features, you can easily see where your money’s going Check out all of Frollo’s other features here or download the app here.

Frollo budget and expenses tracker

Overspending makes it easy to pull you in the cycle of living paycheck to paycheck. To get out of this cycle, you need to recognise how you’ve fallen into the traps of overspending so you can fully commit to making lifestyle changes. Within the next few weeks, we will be publishing content that will help you go through the steps to break the paycheck to paycheck cycle.

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