You have disciplined yourself in spending less and saving more. You have saved a total of $5,000 in five months only for you to spend it in less than a week, on things that are not emergency needs. Does this describe you? You may have experienced this many times and now you’re frustrated and seeking to understand why you always do this. There could be many reasons why this happens. Let’s talk about why you’re always spending your savings.

Lack of Clear Financial Goals

You probably have slippers you wear around the house, but you won’t wear that to the office, and neither would you wear a farm boot to the church. If your savings are not well defined, you will spend it however you like. For example, you have saved $5,000, for what exactly? Is it just to have the feeling that you have also saved like others?

This is what you should do when you want to save: tie a purpose around it. Your savings are supposed to save you in times of need, but not all savings are for emergencies. If you are thinking of pursuing a degree, you can save towards that, if you want to change your wardrobe entirely, you can save towards it. That way, you won’t spend it on a course that doesn’t fulfill the purpose of your savings. There’s a popular saying that, when the purpose of a thing isn’t known, abuse is inevitable. When you have a tangible reason for your savings, you won’t unnecessarily spend it on nice designer shoes.

Instant Gratification 

It’s not easy to see a nice handbag on Instagram, while you have $5,000 lying in your savings account, your own money! C’mon, most of us won’t be able to resist such temptation. It’s hard to wait! This can also be due to several reasons. You may feel like someone else will buy it, the vendor may be running a promo you don’t want to miss, and so many other reasons.

Sometimes, the feeling to satisfy a desire doesn’t respect savings, if you don’t have savings, you may see yourself wanting to borrow to satisfy that urge. But you need to be disciplined enough to know when to scroll past and when to check out. If such an item is not in your budget, resist the temptation. Save towards it and wait till you can comfortably afford it.

Peer Pressure 

Some of your friends are struggling financially but they like to appear rich and comfortable. And there you are trying your best to ensure you put an end to your financial struggles, and then boom, your friends upgraded their phones to the latest Samsung S24. You don’t want to be left out, so you withdraw all your savings to acquire this newest technology. Meanwhile, your old phone is still a good model and absolutely nothing is wrong with it. In fact, you got it less than 6 months ago. It’s okay to upgrade your phone or buy whatever it is you like, but if there were no peer pressure, would you have still considered it?

Lack of Budgeting 

When you don’t have a budget, you will be spending until you have zero dollars left while your basic needs are not completely met. Then, you will have to dip your hands in your savings, and since you still don’t have a budget, you will splurge your savings on anything and everything that you can hardly account for.

Before you receive your paycheck, have a budget. Your budget will help you differentiate between what your needs are, then you can avoid those wants that make you end up broke. 

Psychological Reasons Why You Spend Your Savings 

Emotional Spending 

If you’re extremely happy or sad, you may want to go shopping just to make yourself feel better or reward yourself. There’s this little joy that comes when you acquire something new. This habit can put a dent in your savings or you may take on extra credit card debt just so you can feel better.

Treating Yourself 

Sometimes, we work so hard forgetting that we need to treat ourselves. But there’s a thin line between treating yourself and looking for an excuse to lavish on your desires. It’s okay to treat yourself, you deserve that spa treatment, shopping experience, vacation abroad etc. But do you have to withdraw all your savings? No! You need to discipline yourself so you don’t go broke and struggle with debt.

Conclusion 

You may find yourself deep in debt after spending all your savings and taking out credit card debt, payday loans, etc. There are several reasons why anyone could be struggling with overwhelming debt, but there’s hope. Your debt can be reduced by up to 80%, and interest will stop immediately. You can speak with one of our debt experts at EmpireOne Credit to get a personalised consultation. Call us at (416) 900-2324 to schedule a free consultation with us. Being debt-free feels good!