Reasons You Shouldn’t Spend Money You Don’t Have
Written by
Jake Safane
Edited by
Maria Concepcion
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Based on all the social media memes and videos that joke about overspending, you might think that spending money before you have it is a funny quirk. Or maybe you think it’s a minor bad habit that you’ll eventually break, perhaps when you earn money. However, it’s important to realize that for some people, overspending could tie into a real addiction. And if you’re not careful, it could lead you down the wrong financial path, all the way to bankruptcy.
Not everyone agrees on exactly if/how overspending fits in with mental health challenges, and just because you sometimes shop too much doesn’t mean that you automatically have an addiction.
However, some people suffer from compulsive shopping, “a disorder characterized by excessive shopping and/or spending that leads to subjective distress and impaired functioning,” notes research published in the Current Opinion in Psychology from Dr. Donald Black, professor of psychiatry at the University of Iowa.
As Dr. Black’s research notes, compulsive shopping is sometimes classified as a behavioral addiction, and sometimes, it’s grouped with mood and anxiety disorders or OCD.
While the classification might be something you wish to explore with your own therapist if you feel like money challenges are part of something bigger, financially speaking, it’s important to recognize that spending money before you have it is a red flag.
One day, you might book a plane ticket on a credit card even though you don’t have enough money in your checking account, thinking that you’ll pay off the card with your next paycheck. But then what if an unexpected medical bill pops up and you need to put your paycheck toward that? Or what if you underestimated your general expenses that month, and you need your paycheck to cover rent?
That can easily kick off a debt cycle, and before you know it, interest charges are racking up and you can’t afford to pay off your credit cards. And with some people, they don’t just fall into this cycle by accident. They know they’re overspending and don’t have the money to pay off their debt, but they still keep buying things anyway, perhaps because of an underlying addiction.
Overall, 44% of people who’ve filed for bankruptcy agree that spending/living beyond their means contributed to their bankruptcy, according to Ascend. While issues like medical expenses are a more common reason to file bankruptcy, this shows that it doesn’t have to be an extreme, unexpected event that causes you to go bankrupt.
Instead, bad financial habits like spending money before you have it — whether caused by addiction or a simple mistake — can have much larger consequences.
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