By Sabrina Loh
Nobody likes to talk about it, but many people struggle silently with a spending problem.
Whether it’s a late-night online shopping spree, over-ordering extra dessert, a YOLO experience, or splurging on groceries, overspending can happen too easily to anyone.
Before your bank account becomes a source of anxiety and you’re wondering where all your money went (again!), it’s important to address that you have a spending problem, because overspending can be dangerous. It could lead to home foreclosure, debilitating debt, poor credit, and even mental health issues.
Here are 16 red flags that may signal a spending problem.
Hiding purchases from others
One of the biggest red flags of a spending problem is hiding or lying about your purchases from others, especially when you live with someone, like your partner, family, roommate, or friends.
You justify buying things you don’t need
If you find yourself constantly looking for a reason to shop, then convincing yourself of non-existent reasons to buy things you don’t need, you most likely have a spending problem. Much like addictions, what you’re actually seeking is the ‘high’ of your next fix.
Maybe you’ve had a rough day or something is bringing you down. The term ‘retail therapy’ is overused, but it accurately describes how some people take comfort in shopping to cheer themselves up.
You’re surprised by the mail
Are there packages that arrive in the mail that you don’t remember ordering? You may be impulsively spending on things that look enticing in the moment, but loses its importance the moment you hit order.
Your conversations revolve around shopping
If most of your conversations revolve around your latest finds and things you’re planning on buying, it may be a signal that you have a spending problem.
You’re ‘rewarding’ yourself
Got a bonus at work or some birthday money? If the first thing you do with that money is go on a shopping spree to ‘reward’ yourself, think again.
You don’t know how much you spend each month
If you avoid tallying up your bills and don’t know to this day an estimate of how much you spend every month, it’s very likely that you’re overspending in some areas and avoiding confronting the problem.
Borrowing more money
If your credit cards are all maxed out and you even borrow money from friends and family just to go shopping, it’s a clear indication that you have a spending problem because you’re continuing to spend even though you don’t have the money to do so.
On top of that, you’re perpetuating the cycle of accumulating more high-interest from your credit card debt, and putting strain on your relationships.
You have items that home that still have tags
If there are items in your house (usually in the closet) that still have tags on them, it’s an obvious sign that you’re buying things that you don’t even use.
You have multiples of the same items
You might find that you have 15 white T-shirts and multiples of the same time. You’ve forgotten that you’ve already purchased it because you’re not spending with intention, and you’ve already lost track of what you own.
You make good money but you’re still living paycheck to paycheck
Do you still find yourself living paycheck to paycheck even though you’re already making more money? If you combine a spending problem with lifestyle inflation, no salary will ever be ‘enough’.
You don’t pay your bills on time
Not having enough money to pay your bills and your debts is an obvious red flag, especially when the reason is from shopping too much. It’s a sign that you’ve prioritised spending instead of meeting your financial commitments.
You feel guilty when you spend
Imagine this — you get caught up in the great ‘thrill’ of a big sale or peer pressure, you mindlessly add things to your cart, then you feel buyers remorse.
Your credit score dips
Another thing to watch out for is when your credit score dips. This is bound to happen when you’re spending above your means and unable to pay your debts on time.
You’ve taken money from other accounts
If you’ve taken money from your emergency fund or your retirement account just so you can go shopping, it indicates a serious problem. Borrowing from funds like these could leave you in a precarious position in the future.
You’re always thinking about the next buy
If your mind is constantly wondering about your next purchase, you may have a spending problem. Once you’ve bought something, you’re satisfied for a day or so before you get bored and start looking for your next ‘hit’.
If you recognise any of the signs above, then you most likely have a spending problem. However, be kind to yourself and know that it’s never too late to get help from a professional.
In the meantime, here are some tips to help you manage your spending problem:
Create a budget
When you have a spending problem, it’s usually because you’re not spending mindfully and realistically looking at what comes in (income) and what goes out (expense).
Take a good look at your spending habits and create a budget to hold yourself accountable. While it won’t fix the problem completely, it’ll put you on the right track.
Use debit instead of credit
Not all plastics are created equal. Avoid using a credit card when you have a spending problem, as impulsiveness could easily lead to piling on more debt. Relying on a debit card (or cash!) can help you curb impulsive spending.
Just make sure you don’t fall into the habit of transferring money from other accounts to your debit card, as that completely defeats the purpose.
Seek professional help
If you can’t seem to get your spending problem under control, no matter how much you try, you should consider seeking professional help, as it may be a sign of a much more deep-rooted issue. Here is a list of affordable mental health providers in Malaysia.
Tune into the BigPay blog every week to learn more about finance.