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“Comparison is the thief of joy”

It can be easy to look around and compare ourselves to others. Whether it’s admiring another person’s designer bag, nice car, or even someone taking a lavish vacation. It’s easy to see other people with nice, lavish items and desire the same – even if your financial situation doesn’t allow for it.

It's important to remember that we never really know what someone’s financial situation is. It could be that the person with the designer bag is in great debt or in a not-so-great financial position. Learn to keep your eyes on your own wallet and to ignore how your friends or peers choose to spend their money. Develop a self-image that is independent of material possessions.

Where’s your budget?

A recent survey shows that 65% of Americans don’t know how they spent their money last month.

When our spending isn’t properly tracked, it is easy to go out and purchase another dinner or buy another pair of jeans and realize we have overspent!

Prevent overspending by creating a monthly budget covering all necessities and a few wants. If it is easier to not track every dollar, give yourself a general budget for all non-fixed expenses and spend it as you please.

“Retail therapy”

We are all guilty of using retail therapy as a coping mechanism for something going on in our lives. Research shows that shopping and spending money releases feel-good dopamine in the brain, just like recreational drugs. David Sulzer, professor of neurobiology at Columbia, explains that the neurotransmitter surges when people anticipate a reward – like a shopper anticipating a new purchase. This proves the addictive quality of shopping that can be hard to fight. When life gets stressful, or we just want to feel good, we hit the shops or start adding items to our virtual carts.

Misuse of Credit

Credit Cards are a great tool to have in your wallet but you have to be careful to know your means and not go overboard! Research shows that consumers spend up to 18% more when they pay with plastic over cash.

When shopping in places where you tend to overspend, use cash instead of a credit card to ensure you stick to a budget. You can also use a debit card with a careful budget so you know how much you want to spend.

Lack of self-discipline

Sometimes, there’s no deep reason or poor money management behind our spending. Sometimes, we just can’t tell ourselves — or our children — “no.”

Scott Butler, a retirement income planner at the wealth management firm Klauenberg Retirement Solutions in Laurel, MD, explains that it takes tremendous willpower to say no to something we want now.

“One of the big reasons people overspend is that they don’t think ahead,” Butler says.

Too often, we allow our immediate needs to take precedence over more important needs that won’t be relevant for years — such as a retirement fund or our children’s college education. We simply lack the discipline to not exchange immediate gratification for long-term benefit.

Define your long-term financial goals. Create a plan for reaching these goals with small and measurable steps. While working through your plan, assign an amount to save each month. Before giving in to an impulse purchase or an indulgence you can’t really afford, remind yourself of your long-term goals and how much longer your timeframe will need to be if you spend this money now.