One of the simple basics of personal finance is that you shouldn’t spend more money than you earn. However, this simple truth eludes many of us. I know that I spent a great deal of time during college racking up debt. Spending doesn’t necessarily have to be a bad thing, as long as it’s kept under control and you don’t live beyond your means. We know that debt is bad for us, but many of us still spend beyond our means anyway, paying interest and sometimes getting in over our heads. Why do we get into debt? Here are 3 reasons that you might be spending too much:

1. It Makes You Feel Good

A couple of weeks ago, a firestorm hit personal finance blogosphere when a study from Ohio State University was released, indicating that those between the ages of 18 and 27 feel good about their debt. We’ve heard about shopping therapy for years, and how going out and buying something can give us a momentary high and take our minds off our troubles. However, this is a different animal altogether: Some people actually get a self-esteem boost from building up debt. It’s not until later that debt begins to take its emotional toll: The Ohio State study found that at about 28, debt started becoming a problem for people.

2. You Don’t Want to Wait for What You Want

Another issue is that many of us don’t want to wait for what we want. Our society is one of instant gratification. Rather than save up for something, credit makes it possible to buy what you want immediately. You spend too much because you can. It’s easy to buy things on credit, and easy to spend too much. Pretty soon, you realize that you are in over your head. A waiting period might be a good idea. It can help you decide if you really want something, and prevent you from impulse buying just because you have a credit card in hand.

3. You Haven’t Figured Out Your Priorities

One of the reasons that we spend too much and waste money is that we don’t really know our priorities. Without a prioritized spending plan, it’s too easy to just watch the money go. When you have a purpose for your money, it is easier to live within your means and accomplish your financial goals. Take some time to decide what’s most important to you and prioritize your spending. Then, make the decision to spend your money consciously, on things that you find most rewarding to you. Evaluating your purchases in this way can help you spend less on things that aren’t so important to you in the long run, and keep your resources for the most vital items in your life.

Bottom Line

Many of us like to spend, and as long as you don’t go into debt, that isn’t a problem. However, you can’t let your spending impulse control you and your finances. You have to take control, and understand the reasons you are spending too much. Once you understand these motivations, you will be able to make changes — and get on the path toward financial freedom.



Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.