5 Types of Overspenders — Which One Are You?

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Plenty of us overspend each month. Some of us overspend so much and so regularly that we end up with overwhelming credit card bills, missed loan payments, and black marks on our credit reports.

One of the keys to gaining control over unhealthy spending habits is to recognize why you spend too much. There are different types of overspenders, and they break their budgets each month for different reasons. Recognizing those reasons can be the first step in fighting back against your bad financial habits.

A growing problem

The numbers from Northwestern Mutual's 2017 Planning and Progress Study show that many U.S. residents have a spending problem. According to the survey, nearly three-quarters of U.S. consumers are struggling with debt, owing an average $37,000 — not counting their mortgage payments. (See also: 6 Old School Tools to Help You Stay on Budget)

The survey found that, after paying for necessities such as housing, food, and transportation, Americans spend about 40 percent of what’s left every month on discretionary expenses like travel, hobbies, and entertainment; they spend only an average 33 percent on paying off debt.

What type of overspender are you? The odds are that you’ll recognize yourself as one of the following.

1. The compulsive spender

Do you find yourself buying a new fitness tracker just because you've had a bad day at work? Does an argument with your spouse send you fleeing to the clothing store? You might be a compulsive shopper, one who overspends as a way to tamp down unwanted negative feelings. You might not even use the items you buy — just spending money on them is enough to provide you with temporary emotional relief.

2. The deal shopper

Do you find it impossible to turn away from a deal, even if you don't need the items that are on sale? Then you might be a compulsive bargain hunter. There's nothing wrong with looking for deals when you are shopping. But you shouldn't buy items if you don't need them, no matter how low their prices are.

3. Keeping up with the Joneses (or anyone else)

Did you buy that expensive car not because you needed it, but because you thought it would look good in your driveway? Then you might be obsessed with "keeping up with" your neighbors, family members, or friends. For you, spending too much is all about maintaining the right image. You want everyone else to know how well you are doing. Unfortunately, it's expensive to keep up with everyone else. Spending too much just to bolster your image can leave you with loads of debt.

4. The secret shopper

Maybe you’ve taken out a new credit card without telling your spouse. Or maybe you purchase expensive gadgets and electronics and hide them in the back of your closet. This type of overspending can result in serious trust issues in your relationships, and could ruin friendships or marriages. (See also: 4 Ways to Stop Your Spouse From Overspending)

5. The extravagant gift giver

Do you think buying your friends or family members new toys, expensive restaurant meals, and high-end wines will make them like you more? Do you routinely overspend just so you can give the best presents each holiday season? Then you might be overspending as a way to get others to like you. This, of course, doesn’t work: People won’t like you any more or less no matter how much you spend on them.

Breaking the cycle

How do you beat your overspending habits? The first step is to create a household budget listing how much money you earn each month, and how much you can afford to spend. Once you’ve done this, you’ll at least know when you are overspending on individual budget items.

Next, it’s important to recognize why you overspend. Does it make you feel powerful and in control? Does it make you feel wealthier than you are? Does it make up for a day of headaches and stress at work?

Once you know what triggers your overspending, you can watch for those familiar urges. Instead of mindlessly overspending, you can replace the temptation to use shopping as a de-stressor by adopting other coping mechanisms, such as exercise, meditation, or other relaxation techniques that won’t break the bank.

You might even seek professional help — not just from a financial adviser, but from a therapist who can help you identify and control the triggers that lead to your overspending.

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