10 Reasons You Can't Stop Spending Money | How To Save Money Faster #Best Education Page #Online Earning

You're walking by a clothing store and from the corner of your eye you see a

shirt that you think would look great on you a few minutes later you find

yourself walking out of the store with that shirt we all know that it's much

easier to spend money than it is to make it and while buying new things from time

to time is ok we can find ourselves in financial trouble pretty quick if our

spending gets out of hand therefore in this video I will share with you 10

reasons you can't stop spending money and if you're new to the channel then

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believe it or not millions of Americans live beyond their means between the rise

in social media and the ever-increasing number of new gadgets to buy resisting

our temptations to spend can be nearly impossible unfortunately not being able

to control these temptations can have dire financial consequences in fact a

recent survey found that one-third of people ages 30 to 49 had more credit

card debt than savings imagine being middle-aged and having absolutely

nothing in your bank account to show for all your years of work I think the

question most of us need to ask ourselves is what drives us dispense so

much behavioral economists have been studying the nature of spending for

years and have identified that 10 main reasons people overspend which I will

now outline reason number one best alternative spending in a world of

scarcity choosing one thing means giving up something else when we spend money on

one thing its money we can't spend on something else now or later for instance

if you choose to attend a four-year college program then you're giving up

the seller you could be making if you instead worked full-time for these four

years or if you only have $1,000 to buy a new TV then the opportunity cost is

spending that same money to buy a new computer therefore there's an

opportunity cost to everything we do and that cost is expressed in the terms of

the next best alternative for example the true benefit of buying a new car can

be assessed in terms of other equally significant things we could have done

with that money unfortunately when the next best alternative option is

considered people tend to lack the ability to abstain from choosing between

either of the two options and instead decide to buy both so in the example I

just provided that same person not only by the TV with $1,000 he had

but Dan would charge the new computer to their credit card causing them to

overspend to satisfy the temptation to have both devices as this behavior

becomes more routine the overspending only gets worse making your chances of

building wealth slim to none reason number 2 tagged money have you

ever been gifted money for clothes or to put towards a new phone and while you're

drowning it that you still use that money for its intended purpose you see

most of us perform mental accounting by dividing our money into separate mental

accounts such as accounts for food clothes rent school supplies and play

money and when done right we spend based on the dollar values we attribute to

these categories in short we only consider the opportunity cost within a

specific account without looking at the bigger picture for example you may have

a line of credit with $5,000 outstanding that you should put your gift money

towards but because it was gifted with the intention of being used to buy a new

phone or outfit you have mentally tagged that money into its respective account

and will choose to not use it for more beneficial purposes instead you should

be looking at your finances using a holistic perspective when you have a

cash inflow assess where the money will be best put to use rather than

allocating it using mental accounting reason number 3 special occasions have

you ever been on a diet and decided that just for one night you would break your

diet to celebrate a special occasion it could be your birthday a holiday or just

a random Friday night and well it feels good to indulge from time to time

unfortunately those calories still count well the same phenomenon takes place

when it comes to spending we tend to overspend on special occasions birthdays

or Christmas because we don't keep track of just how many of them we have

consequently we end up spending over a normal budget failure to incorporate an

exceptional purchase into our budget as one in a series of special purchases can

encourage overspending luckily you can budget for infrequent expenses by

creating special savings accounts earmarks specifically say for birthdays

so that you don't hinder your savings progress by enjoying yourself from time

to time reason number four the present bias present bias occurs when

individuals place extra weight on more immediate rewards

then those in the future for example my future self may want to buy at home but

my present self wants to splurge on a tropical vacation well it often seems

illogical to be giving up the potential for a larger future rewards in exchange

for momentary pleasures the reality is that the further into the future the

roar it is the harder it is to keep its value in mind in fact this is the reason

most people fail to put away money required to fund their retirements while

most people could be millionaires in the retirement years by investing

consistently from an early age they instead succumb to spending on $8

coffees in the newest iPhone in essence the more we disregard our long term

interests in favour of immediate gratification the more likely will be to

have an overspending problem which so I often preach reading down your short

medium and long term financial goals and reviewing them daily so that you can

keep those longer-term rewards at the forefront of your mind reason number

five the ease of credit card spending in addition to the present bias it makes

this over value or current spending versus future rewards the use of credit

cards to pay also increases the potential for overspending you've

probably experienced it yourself that it's much easier to swipe your credit

card to pay for something then it is to open your wallet and pull out cash and

this phenomenon has been researched extensively in fact a 2001 study found

that shoppers who rely on credit cards as their form of payment

compared to those who only pay with cash spend a hundred percent more hence

making overspending that much easier and this makes sense

when you pay with cash you can literally see your funds diminishing whereas

paying with credit doesn't cause the same emotions to resonate so if you want

to spend less take out the cash you want to spend every single month and once

that amount is gone you must wait until the following month to make any of your

desired purchases reason number six though what the hell effect you're

halfway through the month and without realizing it you have burned through the

entirety of your budgeted spending so you decide to continue spending and say

to yourself that you'll do better next month we've all done it and this

behaviour unofficially called the what the hell effect but what the hell

effects the desk that fallen off the wagon causes a feeling of failure which

leads to more indulgence for example let's say you go for a fancy dinner you

know the meal will be pricey and you get there and you see the menu you

know for sure it will be an expensive evening after ordering your meal you

decide to order more as you have already identified that this outing will blow

your entertainment budget for the month putting the what the hell effect into

action in reality this effect is quite irrational as stopping once you've hit

your limit is much more financially beneficial than continuing to spend so

if you find yourself saying oh what the hell let it be a cue that you need to

close your wallet and cut your losses reason number 7 lack of willpower

willpower refers to effortful control that is exerted with the purpose of a

controlling or impulsive behavior I like to look at willpower is a resource that

we deplete over the course of every single day you start each day with a

full tank of willpower and as its depleted you become more inclined to act

on impulse and are more likely to be swayed by desires urges and cravings

although you may regret them in the long run this insight suggests that shoppers

who are tired or distracted will likely increase their impulsive purchases this

is why you need to ask yourself how much willpower you have available in making

financial decisions if you are well rested and relaxed you will be in a much

better situation to make good spending decisions than if you had just finished

a full day's worth of work and are stressed out by all the work you foresee

yourself having to do the following day well your willpower be a tool and not

your kryptonite reason number 8 retail therapy some people really stress by

working out others talk out their feelings with their friends and sadly

some people resort to compulsive spending to overcome their emotions

well detrimental to your bank balance the dopamine spike the spending offers

has been proven time and time again to provide an immediate improvement to a

Shoppers mood you see shopping all those people that

visualize themselves in a better life where they're dressed in nice clothes

are surrounded by nice things buying makes these visualizations a

reality there's no doubt that this form of therapy works which sliced so many

people partake in this behavior in fact a 2016 survey found that 96% of adults

and 95% of teens participate in retail therapy making spending a mood enhancing

tool used by just about everyone reason number 9 shopping addiction beyond

periodic retail therapy lies the potential

developing a real shopping addiction a shopping addiction is characterized by

an impulse control disorder and about 6% of the population could be considered

compulsive buyers now a person cannot be classified as either a compulsive buyer

or not this disorder exists along a continuum in reality there are excessive

shoppers and then there are compulsive shoppers they buy things they do not

need and often cannot afford and place their work their families and their

mental health in jeopardy some of these people who end up in bankruptcy or binge

buyers suffering from a disease similar to alcoholism the most effective first

step for treatment is to identify why and how you're shopping initially became

a problem experts suggest starting a journal to keep track of your triggers

which is the first step in tackling this overspending issue reason number 10

self-justification the mind is a powerful tool and it can convince us of

just about anything one of which is that we deserve to spend money justifying our

choices to not only ourselves but to others around us is part of being human

making sense is a deep human motivation but making sense is not the same thing

as being correct for example the person who has bought a luxury at him but feels

guilty about it may try to alleviate his guilt by coming up with an additional

reason to justify his choice such as it was on sale I just had to buy it but

this doesn't mean that by justifying the purchase to themselves that it made the

item cost any less this is why you need to create a list of want and need items

when considering your purchases by writing out the items you intend on

purchasing you can mentally deliberate on the level of necessity so that you

don't self just fight frivolous purchases as frequently which will save

you a ton of money over time thanks for watching if you want to go from the life

you have to the life you deserve then hit the subscribe button now

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