It’s a scenario some people may find themselves in far too often. They pull out their debit or credit card to pay for something without knowing whether they can actually afford it. Or maybe they know they have already spent their budgeted amount in a certain category — dining out, for example — but still find themselves pulling into the fast food drive-thru for lunch.
Such overspending may seem like a sign of poor impulse control and a lack of self-discipline. That may be true, but experts say there may be other factors at play. “If you were raised in an environment where budgets were never discussed, it may be difficult to follow [one],” says Sarah Fallaw, president of DataPoints, a firm that helps financial advisors understand the behavioral habits of their clients. Having parents who modeled poor habits is only one of several reasons people may find it difficult to stick to a budget. Others include insufficient planning, retail marketing and, yes, personality weaknesses.
[See: 11 Ways to Save Time and Money.]
Overspending starts with poor budgeting. Rakesh Gupta, associate professor at the Robert B. Willumstad School of Business at Adelphi University, says most people’s problems start with the lack of a budget. “What happens is when they are spending the money, they don’t know how much discretionary income they have,” he says. “They have a mental idea of how much to spend.”
Without having a budget written down and by trying to do the math in their head on the fly, people may find they quickly overspend their available cash. Gupta, who prefers to keep his budget on a spreadsheet, says the first order of business for those who overspend is to find a budgeting method, app or website that appeals to them.
They should have no shortage of choices, says Steve Shaw, vice president of strategic marketing for technology solutions provider Fiserv. “We work with thousands of financial institutions across the country, and mobile banking and apps have gotten much better,” he says. Many of these systems now offer the option for consumers to receive alerts when payments are due or certain spending is exceeded. What’s more, banks may offer card controls that allow people to turn card usage on and off or set limits.
[See: 10 Out-of-the-Box Ways to Save Money.]
Retailers don’t make it easy. Apps and websites also make it easier to overcome another reason people overspend: busy lifestyles. “The fact is that everyone’s busy, and until now, you really had to stop and pull out a calculator [to budget],” Shaw says. That means people who overspend their budget may do so simply because they don’t have time to sit down and reconcile their accounts in between going to work, attending children’s activities and taking care of other household tasks. However, improvements in financial technology should make it easier to stick to a budget going forward. “Whenever I have a financial need, there should be a tool to help,” Shaw says.
Even people who do have a written budget may have trouble sticking to their plan while shopping. “The stores don’t help,” Gupta says. “They have all these enticements.” Two for one offers, 50 percent off banners and one-day-only sales make it difficult for people not to be lured into overspending.
Gupta says the cure for this budget-breaking behavior is to simply avoid going into the store or surfing retail shops online. If consumers need to make a purchase, they should go to the store or site, buy it immediately and not dawdle in looking at the displays. For people who find themselves regularly tempted to spend more than they can afford, Gupta says adding a message such as “don’t buy today” to the home screen of a phone can be a simple but effective deterrent.
[See: How to Save for Retirement on Less Than $40,000 Per Year.]
Personality plays a role. Of course, personality and character traits do play a role in a person’s ability to stick to a budget. Fallaw says budgeting is a job, and “the best predictor of how you’re going to do a job is conscientiousness.” Emotional stability and organization are important as well. “People who aren’t attentive to the details will have trouble sticking to a budget and building wealth,” Fallaw says.
However, those who are disorganized or who have poor impulse control aren’t destined to forever be overspending their budget. Enlisting an accountability partner or using a tracking app can both be ways to help compensate for personal weaknesses. Over time, by practicing self-control, people may find it easier to stick to their spending plan.
Changing one’s attitude is key to long-term success, according to Shaw. “You can’t just swipe a credit card and hope to pay it another day,” he says. “It starts with the mentality that ‘I have to be financially healthy.'”
More from U.S. News
10 Ways to Repair Your Retirement Finances
10 Retirement Planning Moves to Make in Your 20s
Why Is It So Hard to Stick to a Budget? originally appeared on usnews.com
