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Understanding Why You Overspend

Oftentimes, when we’re on the journey towards having a financially stress-free life, we feel so bad when we overspend. We beat ourselves up for “falling off the bandwagon” after trying hard not to spend more than we should. We even feel guilty for treating ourselves every once and a while.

But the thing is: overspending is not entirely your fault. In fact, retail and online stores put many marketing tricks in place just so you can leave having more than you actually need.

So before we begin, do know that you shouldn’t blame yourself for overspending every now and then.

Let’s take a look at the three main factors that make you overspend:

1. Marketing Tricks

A lot of retailers put marketing strategies in place to encourage spending. Fashion stores use big, flashy “SALE” signs to push you to purchase things you don’t need. They also trigger a sense of urgency by using signs that say “Limited Time Only” or “Seasonal Reductions”, targeting your fear of missing out. When it comes to high-end and luxury brands, a study found that salespeople will make deliberately ignore you to push you to buy an item to prove them wrong. These are some of the marketing tricks to look out for.

2.  Social Pressures

As human beings, we engage in cooperative and competitive behaviours, which also happens in how we spend. To cooperate within the community or to feel a sense of belongingness, some consumers buy things they almost can’t afford, such as 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, leaving our bank accounts blank.

3.  Illusion of Convenience

Improvement in technology and payment convenience, such as making cashless transactions, has made overspending inevitable as well. This is because cash evokes pain when you see it physically reduce. Without the pain of paying by cash, debit and credit cards have created this illusion that there’s more money than we actually have in the bank. 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.

There’s still hope!

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.

The Bottom Line

Remember that overspending is not entirely your fault. By keeping these reasons in mind, you can surely avoid overspending. But if you end up overspending, don’t feel bad. There’s always a chance to make our spending habits better.

Do you have some tricks that help you avoid overspending? Share them with us down at the comment section below! We’d love to hear from you.

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