To understand the psychology behind overspending it’s crucial to recognize that there’s a lot of emotions behind money in general and the decision-making about spending.
One example of this is when people spend beyond their means because they believe that buying things will make them happy.
In addition, they often spend on things they can’t afford in an effort to keep up with others materially.
People often find that this spending not only does not make them happy, but it actually makes them even more anxious since they become mired in debt on top of their other problems.
The financial insecurity that then occurs affects mental health in serious ways, including boosting stress and insecurity, intensifying the struggle to function under the burden of debt and the frequent feelings of lowered self worth.
There are actionable ways that overspenders can develop healthier habits that will give them peace of mind over their finances.
For starters, they need to recognize that overspending has not and probably will not made them happier individuals.
Once they realize that, they can take more practical financial steps like setting budget goals, making sure they know what they’re spending money on, and paying down their debt.