If you’re reading this, I’m guessing you fall into one of two categories. Either you’re on top of your finances but you’re a little curious to learn more about the five phases of overspending or you know you have some spending issues and you want to figure out where you fall within these five phases.
If you want to get ahead of your finances, you absolutely need to be aware of these 5 phases of overspending. It’s crucial that understand the impact that moving through these phases will have on you and your family if you aren’t on top of it.
I modeled my 5 phases of overspending to the 5 stages of grieving.
Let’s break it down and jump into each of these phases one-by-one.
Those who are in denial think, “If there’s money in the bank, spend it.” The denial phase is full of over spenders. If you are an over spender, it’s time to take a hard look at yourself in the mirror. You may be in denial.
People in this phase don’t have a care in the world about what they spend. They spend like crazy with no limits or worry. The denial phase is characterized by a buy now and deal with it later mentality.
If you’re in this phase – you need to wake up! This is the worst place you could be.
Eventually, you get to the point where living paycheck-to-paycheck no longer works. There are bills to pay but you don’t have the money to pay them. You’re 2 days away from payday but you have a bill due now. So, you need to go to a check advancing place or you need to borrow money from friends and family.
This is frustrating. It’s frustrating because you don’t have the money in your bank account but you know it’s coming.
You may cycle through the denial and frustration phases for a while because once you get the money and pay the bill, you will move right back into the denial phase. Something needs to give.
Here, you know you have cycled through denial and frustration for a while. Then payday comes around. Now you’re bargaining with yourself. You know you should pay back the money you owe or pay down your credit card debt, but you convince yourself that you need to spend the money on something. You convince yourself that you’ll pay everyone back with your next paycheck. You have the money and you really want to treat yourself so you do. You tell yourself it’s okay to spend the money because you have it. You can always pay off your debts later.
After all of the denial, frustration, and bargaining, you’ve spent too many nights lying awake reflecting on your life and why your accounts are empty at the end of the month. The constant cycle has put a strain on your relationships because you are always fighting over money. You’re going to work to earn money but you aren’t happy. It isn’t paying enough.
This endless cycle continues every month and you ultimately start feeling the stress. You start feeling sad, helpless, and depressed about your financial situation and it starts to bleed into other areas of your life. This is not where you ever pictured you’d be and you hate the way it feels.
Finally, you get to the acceptance phase. You accept the fact that you have money issues, that you need help and that you are ready to do something about it. You’re sick and tired of being frustrated and depressed about your money situation. You finally get to a point where you’re fed up with living paycheck-to-paycheck, having no money and/or being in debt. You’re now ready to make some drastic changes to get yourself out of the mess you’ve made.
This is when you really begin to turn your life around. Stop living paycheck-to-paycheck. Pay off debt. End the constant rat race.
For our family, it took hitting this stage to finally decide to take action to eliminate our debt through research and seeking help.
Be real with yourself and accept where you are at right now so that you can do something about it. If you’ve reached the acceptance stage and you’re ready to take action, check out our Free Family Monthly Action Plan. This Monthly Budgeting Action Plan, offers step-by-step instructions to guide you through the exact steps you need to take to set up your own family budgeting plan.