3 Reasons You Are Overspending

Splash it!

Ever felt guilty about buying that expensive bag, girls? Guys, what about that pair of branded leather shoes?

Every now and then, you will scream out aloud "Yes, I deserved this!"

After all, you worked your ass for months in clinching that sales pitch, in passing that major exam, finally getting that big fat annual bonus for slogging a year at work and maybe because guys, you just passed your IPPT!

BUT WAIT!!!

This isn’t rewarding yourself, this is overspending and spending unnecessarily!

Are you aware of how you are overspending unnecessarily?

One, RETAIL THERAPY.

Picture this, you waltz along the shopping belt and decided to enter that luxury goods boutique just for fun and you check out that bag with a $7,500 tag. You feel the tingle in your heart and you pucker your lips thinking “Well, I just concluded a successful sales pitch that I worked on for months” and you’re feeling triumphant that you can conquer just about anything!

Or you could be feeling dejected because you just got out of a relationship and you feel that you need a pick-me-up.

Within minutes, you’re a happy owner of a very expensive handbag.

Two, ADVERTISEMENTS.

In our daily life, we come across tonnes of advertisements. Especially if you take the public transport, you will not be able to tap that ‘X’ to close the advertisement or swipe the advertisement away. As you sit in the cabin and stare into open space, that vacuum cleaner banner smiles at you unfailingly. Day in and day out, for 30 minutes in your life. You start to think about it while you’re doing the deed in the WC, you start to talk about it during your gatherings and you start to look at it while you’re at the mall! Not any longer, you’re a proud owner of that vacuum cleaner.

This is what advertising does for you, in case you haven’t realised that yet.

Three, PEER INFLUENCE.

So, you’re at your friend’s housewarming party and suddenly someone quipped from the kitchen “Check out this dishwasher!” Your host starts to share about how easy life has become with this machine and the extra time you get to flip that fashion magazine.

“We all know what a dishwasher does but really, do you have that much dishes to do?”

As you make your way home, you start to think about how nice it is if you can keep your hands soft and smooth with lesser dishwashing. The idea has been planted, and the fantasy may just be soon realised without you realising it. Smirk.

STOP ROBBING YOUR RETIREMENT!

Do you know that you are just robbing yourself and there is a slight possibility that you’re taking on more & more debts?

Mentality - It’s all in the mind

In today’s modern world, we are going cashless and admit it, how many people perform big-ticket transactions with physical cash? Very few or almost none, unless you have a vault in your home.

This will mean that YOU are actually swiping your credit cards more often and if not careful, you will be spirally down the debt hole.

And besides, buying on credit means you get to pay off the amount at a later stage in time and in parts too! It is good if you have strong self-control and discipline but it can hurt your mindset if you are not strong!

So how does this hurt you?

We talk about future money, as you are charging to your credit cards. You are smart enough to break a big-ticket purchase into small repayments (make sure you are enjoying zero-interest for this facility) but are you aware of the effective interest rate of your credit cards?

Then there are the opportunity costs, given that you repay your credit cards in full. That lump sum of money can be used to generate income by earning interest in the various types of bank deposit accounts or generate returns and/or passive income in investment tools such unit trusts.

There are two ways you can do it; lump sum or dollar-cost-averaging. You have the option of employing the compounding effect to enhance your money too!

To sum this up: the higher your income, the tendency to splurge or overspend is higher and henceforth, it is important to identify your spending habits and to introduce changes.

It never hurts to start saving more and start saving earlier than your peers.

Don’t be the one turning green with envy (or regrets)!!!

Talk to your finance professionals right now to find out more!

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