The Hidden Cost Of Overspending
In today's world, it's never been easier to overspend. Small things like buying a coffee daily or ordering from Amazon once a week add up. Don’t even get us started on subscriptions that we pay for over and over without us even remembering we signed up in the first place!
Many of us recognize that overspending impacts us in more ways than our bank accounts, but we still struggle to make lasting changes.
Imagine what breaking the cycle of overspending would feel like, you could start saving for that family vacation or even think about investing. Next time the car breaks down, you would have the money to get it fixed with no stress.
Keep reading for help identifying some of the top causes of overspending and how GravyStack can help you and your children practice smarter spending.
Creatures Of Habit
Our relationship with money begins at a young age. We develop habits and tendencies toward money by seeing how our parents handle it and the conversations (or lack thereof) around it.
Did your parents explain budgets and how to stick to them?
Were they impulse spenders, adding items to the shopping cart without a second thought only to crack down when the emotions that come with an empty bank account caught up?
Did they keep finances close to their chest, never allowing you to understand your family's financial situation and never giving you the confidence you needed to manage your own once you grew up?
With no proper guidance on money management in school, many of us grow up to mimic the same financial habits of our parents.
It should come as no surprise that our kids are just as impressionable when forming their own spending habits. Without guidance and intentional lessons, our kids will simply repeat our financial habits.
Justification
When we sit at the computer and look at our shopping cart It’s easy to slip into the mindset of, “I deserve this,” “I just won't eat out this week,” or “I'll just use the money I'm getting from my tax return to pay for it.” to justify a purchase deep down we know we shouldn't make.
When managing a family budget, these justifications compound and quickly add up, leaving us feeling helpless in the face of mounting expenses, thinking, “where did it all go…again?”
Unfortunately, it's not as simple as just saying no. We have a finite amount of willpower and are easily persuaded by habit, marketing tactics, and our emotions to make more expensive purchases than we can afford.
Let's dive deeper and take a look at some tips on how to stop overspending.
Common causes of overspending and tips to help
Emotional purchases
According to Self.inc, 77% of Americans said they emotionally spend in some capacity, with the majority (49%) saying they buy products they don’t need purely to feel happier.
We make emotional impulse buys when we are feeling down, excited, or just plain bored. This type of buying often leaves us feeling regretful and stressed out after the fact.
How many times have you bought something online, only to regret it the next day?
A few good tips for avoiding emotional purchases include:
- Taking a few moments to acknowledge your emotional state before buying something.
- Sleep on it and see if you still want the item tomorrow.
- Stimulate yourself in a different way, take a walk, or read a few pages from your favorite book.
Subscription services
In today's digital age, it's easier than ever to subscribe to different services. From music streaming subscriptions to meal kits, subscription-based services make up a large part of our family's spending. Sometimes we sign up for these services but forget about them or don't use them enough to justify their cost.
Take a moment and think, "how many subscription services am I subscribed to?"
Now check your bank statement and see what the true number is.
Tips for avoiding subscription services breaking the bank include:
- Taking advantage of free trials to test out services before committing long-term.
- Audit your subscriptions on a monthly basis, and think about how often you used the service and if the cost is still worth it.
- Only use 1 or 2 streaming platforms a quarter and rotate them throughout the year.
Lifestyle creep
As our incomes rise, so do our lifestyles. The phenomenon of increasing our expenses at the same rate our income rises is known as lifestyle creep, and it can be hard to spot, as it often happens gradually. We upgrade our cars, take more expensive vacations, and buy the latest gadgets without even realizing it.
Have you ever found yourself wondering why you don’t have more left in the bank each month even after a bonus or a raise?
Tips for avoiding lifestyle creep include:
- Using automated tools to help you maintain your current budget even if you get a raise or bonus.
- Have a set account for non-planned spending. Look, everyone is going to slip up every once in a while and buy something unplanned, but this is less harmful if you budget for that behavior and only spend your money on those items.
- Identify and set quick and big goals and funnel money to a special account for those. That way you always have your income supporting your plans and your spend behavior can’t impact those plans.
The true cost of overspending
When we overspend, there's no extra money available for enriching, yet unexpected expenses arise. A few examples of this type of expense would be things like field trips or fundraisers for the kids. These are not things you likely want to forego, since that could leave your kids feeling as though they don't have enough support.
Experiences such as family trips that should be enjoyable and full of beautiful memories, become stressful and anxiety-ridden when money is tight.
Finally, when we overspend it creates an unhealthy relationship with money that is passed on to our kids. We want to set a good example and teach our kids how to responsibly manage their own finances, but when they only see us spending with no insight into how to make smart choices, and with no chance to practice making their own choices, how can they learn?
The true cost of overspending is not just financial.
It leads to feelings of guilt, adds strain to the relationship with our family, and teaches our kids the wrong lessons about money.
When was the last time you sat down and talked to your kid about finances?
How GravyStack Can Help You And Your Kids
Many of us were simply never taught about finances as kids. We accept that lessons for driving, learning an instrument, or even playing a sport are “worth the cost” but where is the focus on the #1 skill that impacts every part of life? It is time to place priority on teaching kids how to manage money the smart way so they can use those skills to enhance every aspect of life, for their whole life, and eventually pass it on to their kids. .
According to a survey conducted by Standard & Poor’s, only 57% of U.S. adults are financially literate.
GravyStack understands the importance of financial education and is dedicated to helping kids become financially literate through the power of play. We break down barriers that keep families from having productive, comfortable, and honest conversations about money by making finance fun!
Unlike other finance apps that focus solely on parents cutting back expenses, or worse encourage giving kids a debit card with no way to learn how to manage finances (really just helping them spend spend spend!) GravyStack offers an end-to-end financial education for kids and a roadmap for parents to make their kids financially competent.
GravyStack was built by financial experts and can help parents gain insight into their financial blind spots all while teaching their children about money in an age-appropriate and fun way.
Ready to invest in your kids financial education so you can as a family stop overspending on the things that don’t really matter?
Download GravyStack today and start teaching them how to save, budget, and invest their money responsibly.
With GravyStack, you can be sure your kids will have a bright future ahead of them.
