Overspending has become a common problem for Americans – about six in 10 currently live paycheck to paycheck, according to a May 2023 Lending Club report.
But what’s causing the majority to live beyond their means? Experts say it’s about more than a person’s budgeting skills.
“Addressing overspending from a purely financial perspective is often insufficient. One must delve into the psychological dimensions of their spending habits to enact lasting change,” says Khwan Hathai, a certified financial planner and certified financial therapist at Epiphany Financial Therapy.
Why Are Americans Overspending?
Here are five common reasons experts say Americans are overspending.
1. Social Pressure
“The desire to ‘keep up with the Joneses’ can lead people to spend beyond their means,” says Sherman Standberry, a certified public accountant and managing partner at My CPA Coach.
It can be tempting to buy what you see others buying as a way to signal that you can afford it, too – from clothes and cars to homes and vacations.
“Some may view spending as a form of social proof, associating material purchases with self-worth or status,” Hathai says.
Instead of trying to compete, focus on what’s most important to you and what you’d like to achieve in your life. “Having a clear financial goal in mind can help motivate you to stick to your budget,” Standberry…
