Are You a Compulsive Spender?Posted: January 31, 2011
Never before in history has there been so many different things to buy, or so many places to buy them from. We are constantly bombarded everywhere with messages telling us that we need to have the latest products being touted. All around us are constant opportunities to purchase every kind of bauble, gadget, or toy. And in spite of a slumping economy, American people are still shopping with a fervent passion.
In recent times, chronic overspending has become a major problem in our society. The growth of capitalism has created a huge demand for goods and services. It is estimated that about ten percent of the American population has compulsive buying habits. A lot of people are finding themselves without any kind of a savings, or worse, in debt over their head. Not only does this impact our individual lives, but it affects our businesses as well. Many businesses go under because of a lack of precaution and poor money management.
Compulsive spending is a form of addiction. Purchasing goods and services can be exciting. When we buy, we get high. It can provide a temporary escape from reality. Too much spending can also induce more spending, as one tries to keep up the momentum. For example, buying a new computer can lead to buying programs, speakers, back up drives, and other accessories.
What makes so many people spend their hard earned money so freely? There are many reasons. The biggest reason is that it is fun to spend money. One may ask, “What is the purpose of making money if I can’t enjoy it?” Yes, but everything within reason. What is the purpose of spending money if it leads to troubles? And the more one overspends, the more trouble it can create.
The society we live in reinforces spending through impelling advertising and marketing devices. Our imaginations are fed by the fantasy of having it all. We want to live well right now, not sometime in the future. We want to have a cushy lifestyle, when we really cannot afford it. But building financial success takes time. It does not happen overnight.
Money really cannot buy happiness. It can only give you a temporary feeling of euphoria, which soon fades away. Just like any compulsion or addiction, you need to keep buying in order to feel good. Many people overspend when they feel depressed or frustrated. Occasional pick me ups are fine, but when it becomes a regular habit things can get out of control.
Nowadays, with quick and easy credit, it is quick and easy to spend money. One of the biggest problems contributing to the urge to splurge is the almighty credit card. Credit cards make money seem as if it is not real. That little piece of plastic engenders a great deal of power. It is a magic wand that one can wave, and suddenly buy whatever one desires.
Sometimes people become over-optimistic about the future, thinking that there will always be plenty of money and that life will just keep getting better. They do not consider that life can hold unexpected events. Another reason some people overspend is lifestyle maintenance. They may suddenly have less income because of investment losses or unemployment, but they continue to spend in the way that they are used to instead of paring down.
Sometimes people overspend in order to keep up appearances. We want to look more successful than we actually are. Keeping up with trends is another reason that people spend too much. It is costly to maintain a fashionable wardrobe or stay on top of new technology. Because these areas change rapidly, it is important to buy smart and think ahead. Ask yourself if that new purchase is still going to be something useful in the following year.
Spending is an important and necessary part of life and business. But how you spend is the key to accomplishment. Spending wisely equals success. A person who succeeds in life and business is someone who paces himself. Patience is one of the keys to achievement. Impatience or impulsiveness is what leads to difficulty.
Business people need to treat their business as a business, not as a hobby. A hobby is a pastime that you spend money on, not make money on. Business is work. It may be work that you enjoy, but it is still work. And a business needs to be budgeted the same way that other areas of life need to be budgeted. What does your business need to focus on as far as expenditures? How much office space do you really need? How much technology does your business really need to invest in? Are you investing in the right kind of advertising and marketing?
Bad investments are another cause of money problems. Risky investments can bring large returns, but there is a reason why they are risky. And be wary of get rich quick schemes. If it seems too good to be true, it is. Know what you are getting into before you get into it.
Many entrepreneurs have lost everything because of poor speculation. A particular product or service may sound like a viable investment, but turns out to big a flop. Be cautious with your money, especially borrowed money. Research and know what you are investing in. Your reputation, and your company’s reputation, are important to success.
Overspending has its consequences. Spending can be exciting, but it can also cause a great deal of stress when those bills start coming in. Compulsive spending can lead to financial hardship and even bankruptcy. Many people have lost their homes and material possessions, as well as losing their spouse through divorce.
Debt collectors are relentless and bankruptcy can be embarrassing, even damaging. Collection agencies will call you everyday at all hours. Your wages can legally be garnished, and money can be withdrawn directly from your bank account. When applying for work, many potential employers will check your credit. If they discover that you have a bad credit history they will not hire you. The lifestyle that you lived previously will be seriously curtailed. You could also have difficulty applying for any kind of loan, renting an apartment, getting a cell phone contract, or buying a car.
The size of one’s income has nothing to do with compulsive spending. Overspenders can be at any income level. As a matter of fact, the more money one makes the stronger the propensity is to spend it. Many famous and wealthy people have incurred huge debts, made large business mistakes, and have filed for bankruptcy.
Henry Ford went into serious debt with his first motor company which ultimately went bankrupt. Charles Schwab, who made his money in the steel business, squandered a fortune on parties, gambling, and extramarital affairs. When the stock market crashed in 1929, he ended up in bankruptcy. Television show host Larry King filed for bankruptcy twice in his life because of large debts. Donald Trump owned two companies that went into bankruptcy. At one time Michael Vick was one of the NFL’s most handsomely paid players, and he was also a major overspender. He put himself into millions of dollars of debt and ended up filing for bankruptcy.
It is possible to recover from overspending. Like any compulsion or addiction, the only way to stop is to get a grip on yourself. Do not wait until you hit rock bottom. First, you have to admit that you have a problem. If you need assistance, see a counselor. Support groups can be helpful, also.
Get to the root of your problem. Identify the triggers that cause you to spend without discipline. What events or emotions induce the compulsion to spend? What are your thoughts and feelings about money and material things?
Be realistic about the money you have and what your actual needs are. Set boundaries for yourself. Stay within your means. Stop spending money on unnecessary items. Stop and think before you buy. Ask yourself, “Do I really need to make this purchase?”
Keep track of all your expenditures. Make a financial plan and stick with it. Most of the people who become financially well off do not get there quickly. They plan and build one step at a time with clear goals and effective strategies.
Written by-Conny Jasper