Remember when you were a kid and couldn’t wait to be a grown up so you could, “Do what you want, whenever you want?” Fast forward to the present. In our modern age of living to the fullest, we may have so many interests that we fail to give any single one a good chance. This can also be looked at as “splurging”, as opposed to “investing.”
When we give in to splurges, we aren’t aligning our resources with our long-term goals—aka, what we really want out of life. Here are some dangers of overspending, and how to turn your situation around:
You Lose Focus
As we’re bombarded by instant gratification and information overload, it’s easy to lose your focus in a vortex of digital distraction. And when every device, from your cell phone to iPad is equipped with instant pay options, it’s hard to stick to your goals and save accordingly.
Fix: When your life isn’t adding up, it’s time to subtract. Figure out what is really important to you, what really makes you tick. “Don’t get busy doing stuff,” suggests Alan Steinborn, founder of the financial education platform Real Money. “Get away from your distractions and your devices, and sit with your ‘unfocus’ for five or ten minutes.” By getting away from your daily distractions, you can take the time to figure out what brings you the most joy in life.
You Aren’t Making Headway on Your Goals
When you feel as if you are spreading yourself too thin, you don’t have the energy to channel your efforts on your big, long-term goals. In turn, you lack focus and make little headway on what’s important to you.
Fix: What you do every day is how you spend your life. “Does this goal or action move me towards the lifestyle I’m trying to create?” Creative coach and financial blogger Carrie Smith of Careful Cents suggests asking yourself. Once you narrow it down to two or three goals, start small by opening a separate account with your credit union for a specific savings goal. Whether it’s to pay down debt faster, save for a car, or to go back to school, you’ll be able to make automatic transfers and track your savings more easily when you have a designated savings account.
Money Feels Like Your Worst Enemy
Ever have days when you and your money aren’t talking and you feel like breaking up? When you give in to every urge to spend, you aren’t taking a close look at your finances. It is oftentimes far easier to ignore your situation in the hope that it will resolve itself.
Fix: Money should be used, not spent. To make friends with your finances, figure out what’s important to you and line up your money goals with your life goals. Author and financial blogger Stefanie O’Connell of The Broke and Beautiful Life suggests allowing yourself to explore at first, and let a direction take shape naturally. “The more you can develop specificity and clarity around your goal, the more motivated you’ll become to bring your financial reality in alignment with whatever you need to do to get that goal accomplished,” O’Connell explains.
You Find Yourself In a Vicious Cycle of Debt
When you try to have it all without having enough funds, you’ll find yourself entering a vicious cycle of overspending and may fall prey to the unforgiving overlords of debt. There are plenty of temptations out there and ways to finance them. The problem is that having debt will create a deeper money pit, keeping your goals out of greater reach.
Fix: Sometimes the anticipation of buying something and the experience of shopping makes us happy, not the actual item. Figure out what makes you truly happy. Narrow it down to just a couple of things. “Most of us need a lot less than we think,” says financial blogger Zina Kumok of Debt Free After Three. “I think if you only buy what you really love, you’ll see your spending shoot down.” Kumok also recommends the “Make Do and Mend” approach: “When something breaks, try repairing it first before buying a new one.”
You Have No Emergency Savings
Are you itching to make a big change in your life, such as moving to another city or switching careers? A recent survey shows over a quarter of households in the U.S. don’t have an emergency savings. When you spread your finances thin and have no backup funds, you won’t have the security blanket you need to get through rough patches or to make steady headway toward your goals.
Fix: Ideally you should save three to six months of your basic expenses. That’s easier said than done, right? You can start by evaluating what you don’t need and putting money toward what you love. Get a kick start at your local credit union if you’re not sure where to begin, either by stopping in for some help, or by taking advantage of the products they offer. For instance, you can curb spending by setting limits on your debit or credit cards with CO-OP’s CardNav feature. When you link your credit union card, you get greater control over your spending by setting budgets, choosing where you can use it, and turning it on and off.
While giving in to splurges and spending beyond your means can lead to a wayward path of distraction away from your long-term goals, there are things you can do today to gain your focus. All it takes is a little bit of knowledge, discipline and small steps. You’ll get where you want to be in no time.