By Brittany Stahl, MS student, Department of Family, Youth, and Community Sciences, University of Florida, and Michael Gutter, PhD, Department of Family, Youth, and Community Sciences, University of Florida
Reviewed by Martie Gillen, PhD, Department of Family, Youth, and Community Sciences, University of Florida
Do you know someone who spends his paycheck the second he gets it? Perhaps you have a friend who goes on shopping sprees that leave her low on money or with maxed-out credit cards. These types of actions lead to overspending. Overspending occurs when people spends more money than they have. This is often a result of using credit.
A recent study of college students suggests that to some extent, spending habits can be predicted both by financial knowledge and personality. Financial knowledge usually provides students with valuable money management skills. It also can represent a comprehension of the importance of managing one’s finances, since such knowledge usually includes an understanding of credit use and its implications.
In terms of personality, students who tended to shop to manage their stress and those with higher levels of anxiety were more likely to have problems with overspending. It seems that as some people become more anxious and stressed, they keep on shopping until they reach the point of spending too much. Another personality feature, whether or not a person believes they have control over their life, may also influence spending. Those who believe that chance, fate, or other people determine what happens to them may be more likely to overspend than people who believe their future depends on their own behavior.
Overspending leads to debt and decreased savings. By spending more than you earn, you lose the opportunity to save. What can be done to prevent overspending and start saving? Some suggestions are to manage how much you spend and save by keeping track of where your money goes and sticking to a budget. Don’t shop because you are anxious or stressed. Instead, try to decrease your anxiety and stress through other, more constructive, outlets. But most importantly, remember that you have control over your finances. You get to choose where your money goes, how much you spend, and how much you save.
(Photo credit: Mall by Ava Rose. CC BY 2.0.)
References:
Britt, S., Cumbie, J.A, & Bell, M.M. (2013). The influence of locus of control on student financial behavior. College Student Journal, 47(1), 178-184.
Sages, R.A, Britt, S.L., & Cumbie, J.A. (2013). The correlation between anxiety and money management. College Student Journal, 47(1), 1-11.
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