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How Splurging Impacts Your Finances

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While there is nothing wrong with treating yourself once in awhile, when you continue to splurge and make impulse purchases, your financial fitness can take a hit for the worse.  Often times when we splurge, we do not even realize how much money it has cost us, especially if the purchases are not all at once.  Not only that, but if you put these purchases on a credit card, you can end up paying interest on them later if you did not have the money in the first place. 

Splurging leads to overspending and can derail your short and long-term savings goals and makes what you really want out of reach.  The following are some of the dangers of overspending and how you can fix them to keep your finances on track:

A Loss of Focus
Just because you get sent an email notification or see a Facebook ad about how awesome of a sale a store is having, does not mean you have go shopping.  Now that smart phones and tablets have instant pay options like Apple Pay or Samsung Pay, it can make it even more difficult to stay with the goals you have set.

Fix:  Figure out what things the most important to you.  Look at your budget as a reminder of how falling into the trap of impulse purchase will stop you from reaching your monthly goal.  If you know that it is something you do not need, delete the advertising email so it is out of sight and out of mind.  Also, take time to get away from the daily distractions that can come from the digital world.

Slim to No Progression towards Your Goals
Making those extra purchases on things you do not need, spreads your money really thin.  This can become extremely discouraging because you do not have as much money to put into savings to watch it grow.  When you cannot see your savings grow, it makes it easier to not make it a priority to work towards anymore.

Fix:  Ask yourself important this important question: “Does this goal or action move me towards the lifestyle I am trying to create?”  If the answer is no, then leave it be.  Instead, to help yourself see where the money could be better used, open up a separate account at your credit union for a specific savings goal.  For example, if you want to purchase a new car, open a savings account and deposit your funds there.  You will be able to look back and see how avoiding the impulse decision to splurge, allowed you to get the car you really wanted and needed more.

Money Feels like Your Worst Enemy
When you do not have a good handle on your spending habits, you are not looking closely at finances.  It can be easy to not want to investigate where you have been spending and rather hope that by not looking, it will fix itself.

Fix:  Implement practices that allow you to track how much money you have.  Do not go without balancing your checkbook because you are afraid to see the balance.  Keeping good records and having knowledge of your accounts will lead you to making better spending decisions and can help you adjust during the month to stay in line with your budget.

The Vicious Cycle of Debt
When you spend like you have the money to do so, you will find yourself in a continuous cycle of overspending and increasing your debt.  The vicious cycle of debt will only keep placing you further and further away from the goals you want to reach.

Fix:  Sometimes the experience of going to the mall is actually more fun than buying things.  If you know you are going shopping with a friend, see what you have budgeted for the month for shopping/entertainment and only bring that amount with you.  This causes you to not overspend and can help you further evaluate purchasing decisions.

No Emergency Savings
Having an emergency fund helps relieve financial burdens that you might not be expecting and are meant to keep you afloat for a couple months.  But, if you have already spent this money on impulse purchases, you are going to have to figure out how to pay for it with no extra money.

Fix:  When building up an emergency fund, it is best to save the amount of money you would use in three to six month on basic expenses.  Evaluate your spending habits and see where you might be making some excessive mistakes.  Instead of splurging, take this money and put it towards establishing your emergency fund.

As you can see, living in the constant cycle of splurge spending can create a lot of problems for your financial fitness.  However, you can break these habits and get back on track with your long-term goals.  Stay disciplined and put in a constant effort and your financial fitness will be where you need it to be.

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