In this day and age, it’s very easy to fall into the category of ‘living beyond your means’, or overspending. With everyone sharing their lives through social media, it’s simple to get caught in the trap of wanting more than you need. Combine this trend with the ease of spending money, especially online, and it’s the perfect formula for spending more than you can afford.
Tell-tale signs that you’re an over spender
1) You have no emergency fund.
One sign that you’re living beyond your means is not having an emergency fund or having one that is lacking in funds. Your first savings goal should be to establish an account for emergencies and other unexpected expenses. Try to put aside three to six months of living expenses in this account before you move on to risk-based investments.
If you do not have an adequate emergency fund in place, it may be time to step back and reanalyze your spending patterns. After all, you never know when you’ll face an unforeseen event, such as a job loss. Being prepared financially will put you in a better position to deal with this type of incident should it occur. You can open a “U name it” savings account and have a good backup in case of emergencies. With this type of account, you are able to set savings goals, automate your saving, and embrace then don’t see it don’t spend it mindset.
2) You have no retirement savings.
If you don’t have a retirement plan in place or don’t have funds left over to put into a retirement account, it could be a sign that you may be overextending yourself financially.
If the company you work for offers a retirement plan, you should take full advantage of it. Many companies will even match a portion of your contribution, which basically means ‘free money’ to you. If you’re worried you may not be able to afford to add to this retirement plan, try starting with the minimum contribution amount. This can be as little as 3% of your pay but will add up quickly, especially if your employer matches this amount.
If your company does not offer a retirement plan, you can work with one of our financial experts to develop a retirement strategy aligned with your long-term goals.
3) You over spend on credit cards.
Credit cards are effective tools to help you build credit. They also regularly prove to be invaluable when faced with unexpected expenses. However, their convenience can also lead to excessive spending. If you find yourself stuck in the minimum payment trap and are struggling to pay off your balance, it’s time to reevaluate your monthly budget.
While credit cards are convenient, they are also loans. And you must repay loans or your credit score will suffer, in addition to other consequences. Consolidating your credit card debt into a low-rate personal loan may be the perfect option. Typically consolidation or personal loans have lower interest rates than most credit cards and provide a set repayment schedule to help you out of debt quicker.
4) You take out payday loans.
If you find yourself taking out payday loans regularly, you’re most likely living beyond your means. When you’re in a financial bind, payday loans may seem to be a viable option since they are easy to obtain. However, with steep fees and interest rates, it becomes easy to get caught up in the cycle of not being able to repay the loan and incurring more fees.
Instead, a personal loan from the credit union may be the better option. While a payday loan may put a band-aid on your immediate problem, it doesn’t address your larger financial challenges. With a personal loan and guidance from the credit union, you may be able to break-free from the recurring need for payday loans.
How to Stop Overspending and Become More Financially Stable
1) Start with a budget, limit your over spending.
Write out all your expenses and income streams. Look hard for areas where you can cut costs. Do you buy coffee every morning? Do you purchase a new pair of shoes each month? Are you paying for subscriptions to services you no longer use or enjoy?
2) Open an account.
Financial independence is directly dependent upon your ability to save. After cutting costs to make your budget work, save any money left over in a new credit union savings account. Start by building your emergency fund – making small deposits regularly. Once you reach your emergency fund goal, work with a financial advisor to create a long-term retirement plan. Click here to read more about our savings account options.
3) Make lifestyle changes.
Often, it’s the small changes we implement in our lives that have the most significant impact. There are many actions you can take to maximize your spending power, including:
- Sacrificing some of those unnecessary purchases.
- Selling some of the items you do not use.
- Using coupons or asking for discounts.
- Making a list and purchasing only what is on it when grocery shopping.
- Canceling memberships or subscriptions you no longer use.
We’re Here to Help!
Overspending has become more prevalent in today’s society. However, understanding what changes you need to make will provide you with the financial stability you need now and in the future.
If you want to learn more about these services or have questions, call, chat, text, or stop in! Our team is available M-F, 9am-4pm ET. (315) 671-4000.
Each individual’s financial situation is unique, and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.
