3 Reasons We Overspend

by Manisha Thakor

Have you ever set a financial goal only to find that your actual spending significantly surpassed your budget? When you have the best of intentions to create financial health, why is it so darn easy to sabotage your progress? As a female financial advisor and confirmed personal finance junkie here are three factors that I think contribute to this (all too common) phenomenon.

Reason #1: We are bombarded 24/7/365 by media images of “average lifestyles” that are anything but. I love watching police and medical dramas on TV. But have you ever noticed how it appears that each policewoman and nurse has had a fresh mani/pedi and professional blow out right before arriving at her 7am shift? I didn’t have hair that frizz-free and skin that flawless on my wedding day, let alone before heading out for a day at work. It would be interesting to add up the costs of what it would take to replicate look of these “average” lives. My hunch is that the costs would equate to a total price tag that was 20% more than those positions pay. With unrealistic comparison like that, is it any wonder we overspend?

Reason #2: Most of us were never taught what “healthy spending” looks like – so we don’t realize how much we are over spending relative to our incomes. I’ve yet to meet a single person who sat down and said, “Hmmm, how can I blow my budget”. The much more common response is a shocked, “But I was doing the same thing as everyone else!” Frequent readers of this blog know my favorite budgeting rule of thumb comes from Elizabeth and Amelia Warren’s book, All Your Worth. It’s 50/30/20. That’s the percentages of your take home pay that would go towards needs, wants, and savings in a “balanced spending” plan.

Reason #3: Social media has created an alternative universe where we can “stage” our lives and then share those images the same way a magazine might stage a layout. So yes, a photo of an amazing brioche French toast with crème fraiche and Vermont maple syrup is no longer just a meal. It’s a statement on Who. You. Are. In short, the internet has super-sized and turbocharged the long standing human desire to keep up with the Joneses. In many cases, it has led us to view our lives as if we, too, are watching them through a lens. The things we do – the money we spend, the experiences we have – become the way we “focus” that lens to create the image of ourselves we’d like others to see.

And if those aren’t reason enough, in today’s modern life we are So. Very. Busy. Having people over to our homes requires that we shop, clean, prepare – so often it’s much easier to just go out, which can lead to…you guessed it: overspending.

Ultimately, our vulnerability to overspending strikes at the heart of our sense of worth and identity. In order to protect our net worth, we have to learn how to unconditionally value ourselves, instead of buying into the mass media driven notion that, to improve our lives, we must accumulate more “stuff”. Because usually it is… just stuff.

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Manisha Thakor

From Manisha's linkedin profile page:

Manisha Thakor is the Director of Wealth Strategies for Women at Buckingham Strategic Wealth and The BAM Alliance. 

Manisha and her colleagues provide both evidence-based wealth advisory services for high-net-worth households and core asset management solutions for women and families nationwide with $80,000 or more in investible assets. 

An ardent financial literacy advocate for women, Manisha is the co-author of two critically acclaimed personal finance books: ON MY OWN TWO FEET: a modern girl’s guide to personal finance and GET FINANCIALLY NAKED: how to talk money with your honey. She is on Faculty at The Omega Institute and serves as a Financial Fellow at Wellesley College. Manisha is also a member of The Wall Street Journal’s Wealth Experts Panel, a member of the 2015 CNBC Financial Advisor’s Council, and wearing her financial educator’s hat serves as a part of TIAA-CREF’s Women’s Initiative. 

Manisha's financial advice has been featured in a wide range of national media outlets including CNN, PBS, NPR, The Today Show, Rachel Ray, The New York Times, The Boston Globe, The LA Times, Real Simple, Women’s Day, Glamour, Essence, and MORE magazine.

Prior to joining the Buckingham team, Manisha spent over twenty years working in financial services. On the institutional side she worked as an analyst, portfolio manager and client relations executive at SG Warburg, Atalanta/Sosnoff Capital, Fayez Sarofim & Co., and Sands Capital Management. After this she moved to the retail side and ran her own independent registered investment advisory firm, MoneyZen Wealth Management. 

Manisha earned her MBA from Harvard Business School in 1997, her BA from Wellesley College in 1992 and is a CFA charterholder. She lives in Portland, OR where she delights in the amazing Third Wave coffee scene and stunning natural beauty of the Pacific NorthWest. Manisha’s website is MoneyZen.com.