Why You Spend More Than You Earn & How To Stop

When you spend more than you earn it’s hard to reach your money goals.

Be honest. If your overdraft or credit card were to vanish; could you survive? 

Living paycheck to paycheck was once our reality.

I blamed it on our income so I believed the answer would be more money.

But once I understood the reasons behind our money habits, I made the necessary changes.

Reasons You Spend More Than You Earn

There are many reasons why it’s so easy for us to live paycheck to paycheck.

We live in a consumer society where spending money is encouraged.

How many emails and ads do you get daily with offers to shop online or buy takeaway?

We get tons!

Plus for most, if not all, of us we weren’t taught fundamental money lessons to make the right money decisions.

So our money mindset is shaped by this spending culture.

For the record, it’s okay to spend money, just not more than you should.

Let’s look into 4 of the reasons why you spend more than you earn and show you what to do about it!

Social Peer Pressures

Whether we like it or not, we are easily influenced by our social circles and environments. 

I remember in Uni there was an unspoken rule of always going out every weekend.

I had a job where specific high-end brands’ shirts were part of the “corporate image”.

The pressure to get these shirts was real.

friends and family can also play a part in influencing your financial decisions.

Even to the extent of pressuring you to make a decision you wouldn’t have made on your own.

This can negatively impact your financial health and derail your money goals.

But deeper than that, it can lead to regret, shame and resentment.

What To Do:

Be crystal clear about your money goals.

This empowers you to take the bold stance of resisting pressure.

Secondly, don’t be angry or annoyed when it happens.

People aren’t always out to get you, you simply have differences of opinions.

Instead be honest about your thoughts on the matter.

Finally, take the time to think about the decision.

Sometimes the outcome of the decision works in your favour, don’t be arrogant.

Analyse the value of the financial decision before you may bring.

Should you decide to make the purchase, you’ve made it because you wanted to.

Instant Gratification

The ‘I want it now’ mindset is so prevalent today.

You clicked on a link on this blog and you want it to load NOW.

You call an Uber and you want it to turn up NOW.

Where spending money is concerned, this is called an impulse purchase.

Believe it or not, the bulk of our credit card debts was because of this!

We’d go shop for a few things and come back home with a lot more things. 

I get it, we all want stuff. The problem is, we want it now no matter the cost.

And this is where a majority of consumer debt is built! 

What To Do:

Practice delayed gratification.

Acknowledge your desire for what you want, and wait until you have the money for it.

This way you plan and save for the purchase and get it when your money adds up.

Secondly, take time to think about a purchase, especially if it’s a large purchase.

I have a habit of taking 72 hours to consider a purchase before making it. 

By doing this I’ve realised many times how I didn’t really want or need it.

Finally, adjust your budget should you make the purchase.

We’re not always going to be perfect and there may be days you give in.

Just remember to go back to your budget and make the changes necessary.

No Control Over Your Money

This really means, you don’t budget.

Or maybe you do, but not properly.

When you don’t have a budget you stick to, it’s easy to overspend.

There’s too much to think about in your head that it’s easy to lose sight of it all.

There are bills and debts to pay, family and life costs that come up, plus food to eat and transport to move around.

I haven’t even mentioned savings, investments or charity donations.

Do yourself and your mental health a favour, have a budget.

Having a real budget answers the big question: how much can I afford to spend?

What to Do:

The best place to start is to track your outgoings.

Take stock of what you’re doing with your money right now.

Download our FREE expense tracker spreadsheet to get started.

Secondly, learn how to start a budget you’ll stick to.

This way you’ll take full control of your money.

There is a BIG difference between tracking expenses and budgeting.

Finally, Respect your budget.

Many people start a budget on paper but don’t stick to it in the real world.

The budget and their bank accounts are not in alignment.

Respecting your budget means you actually live by it.

Start a budget today using our budgeting spreadsheet, The Ultimate Money Plan. Designed for you to take control of your money once and for all.

Underlying Issues

Do you always find yourself wanting to make a purchase?

Or do you always go binge shopping during certain periods?

A lot of our money habits are not logical or mathematical, they’re emotional.

I used to buy a new gadget as a trophy that I worked hard because I wasn’t valued at my job at the time.

Some people always want to spend as a way of proving they have money because they grew up without.

Or they always want to shop lavish Christmas gifts to make up for their absence to their family.

Ultimately, we all have underlying reasons that drive our decisions and spending habits.

What To Do:

Look back on your recent transactions and see if your mood affects your spending.

Keeping a spending journal or diary can also help.

I learnt that I snack a lot when I’m stressed.

Once I realised this I started finding other ways to destress that didn’t lead to spending money.

Secondly, think deeply about your money mindset.

A friend once told me that money was meant to be spent and enjoyed.

When he grew up he didn’t have the things he wanted so now he was making up for that.

So when he got offered credit cards he saw that as more money to buy what he wants and treat himself.

Your philosophy and mindset about money is the foundation of your relationship with money. 

Finally, whatever the reasons don’t beat yourself up for it.

Instead acknowledge them and accept that to be your money mindset.

Then find solutions that fit you.

For instance, one may start saving towards Christmas since they know that’s their peak spending month.

Take Action

Which of the above resonates with you the most? More importantly, what are going to do about them?

The greatest thing you can do to stop living paycheck to paycheck is to start a budget.

Check out Our Ultimate Money Plan budgeting spreadsheet to take control of your finances.

Let us know how you’re getting along by getting in touch with us, we’d love to hear from you

Knowledge is powerless without action

So take action, and take care

Thando