How to Know If You’re Overspending

Overspending: We all do it. But when overspending becomes a habit, it can throw off your budget and even keep you from reaching your long-term goals.

4 min read

Overspending: We all do it. But when overspending becomes a habit, it can throw off your budget and even keep you from reaching your long-term goals. 

But how do you know if you’re overspending or simply buying what you need to enjoy life? N26 is here to help you figure it out. It’s our mission to empower people to take control of their finances. Staying on top of your expenses is important so that you can have more money for the things that matter most to you. Learn why we all tend to overspend sometimes and discover how the N26 app can help you reign in your unnecessary purchases.

What is overspending?

Overspending, simply, is spending more than you can afford. But how do you figure out how much you can afford? It’s different for everyone, so you’ll have to decide what overspending means to you personally.

A good place to start is by comparing your expenses with your priorities and goals in life. For example, perhaps your goal is to go on vacation. If you haven’t saved anything for your vacation but you are spending $100 at the coffee shop every week — then you’re probably overspending. But if your goal is to drink excellent coffee every day, then you might not be overspending at all.

What causes overspending?

America is a consumer culture with a lifestyle that revolves around buying things. We’re surrounded by messages to spend money almost 24/7, so much so that it can infiltrate our subconscious. There are two types of factors that cause us to overspend: internal and external.

Internal factors come from within us. They are psychological impulses rooted in our brain chemistry. Examples of spending due to internal factors include: 

  • You love the feel-good rush from buying new clothes or a new phone.

  • You treat yourself after a rotten day at work with a little retail therapy.

  • You order a pricey take-out dinner because you’re just too tired to make any other decision.

  • You make debit or credit card purchases you can’t afford because the electronic transactions just don’t feel like real money to you.

  • You buy a cart full of expensive junk food at the supermarket because you’re hungry.

External factors come from our environment. Temptations to spend money are everywhere, especially when it comes to fitting in with our friends and keeping up with the neighbors. Examples of spending due to external factors include:

  • You hit up the food truck with your friends because you don’t want to miss out, even though you packed a brown-bag lunch.

  • You take advantage of easy access to credit just because you can, not because you need to.

  • You want to impress your coworkers, so you buy them all a round of drinks after work.

  • You get quick cash out of the ATM on Fridays just in case you need it, and then wind up spending it all — every weekend.

  • You buy expensive holiday gifts because you don’t want to seem stingy.

Am I overspending?

Here are some red flags that you might be overspending, especially if you are experiencing more than one: 

  • You miss payments on your bills and rack up late fees.

  • You overdraft your checking account (it has a negative balance).

  • Your monthly budget is tapped out before the month is over.

  • You constantly borrow money from family or friends.

  • You aren’t able to save at all.

How do I stop overspending?

Put the brakes on overspending with a little help from N26’s financial tools.

 Tip #1: Create a budget. Learn how to budget your income and plan ahead each month. Use N26 Spaces to set aside money for your recurring expenses so you aren’t tempted to spend it elsewhere.

 Tip #2: Track your expenses. See exactly where your money is going with N26’s automatic spending statistics. Get a simple visual breakdown of all your purchases by category, like restaurants, groceries, and entertainment.

 Tip #3: Lose the credit card. Or at least limit how often you’re using it. Remove the urge to overspend by leaving your credit card at home. Manage your daily expenses instead with a debit card, like the N26 card. It has no hidden fees and you can open an account in just five minutes.


Conquer your overspending habits with N26

When you understand why you overspend, it becomes easier to change your behavior. But you don’t have to rely on willpower alone — the N26 app will support you with budgeting tools like spending statistics and Spaces. Explore the possibilities and empower your financial goals. Sign up now with N26.

The N26 account is offered by Axos Bank®, Member FDIC. N26 Inc. is a service provider of Axos Bank. All deposit accounts of the same ownership and/or vesting held at Axos Bank are combined and insured under the same FDIC Certificate 35546. All deposit accounts through Axos Bank brands are not separately insured by the FDIC from other deposit accounts held with the same ownership and/or vesting at Axos Bank. The N26 Visa® Debit Card is issued by Axos Bank pursuant to a license by Visa U.S.A. Inc. The N26 Visa Debit Card may be used everywhere Visa debit cards are accepted.

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