Why Do Some People Consistently Spend More Than They Earn?

As a personal finance blogger, it frustrates me that some people consistently spend more than they earn and then complain why they can’t build wealth. Uncontrolled debt can quickly spiral you into bankruptcy. Control your spending!

Yet, this doesn't scare people enough to stop their overspending habits. And it's not just hoodlums that spend more than they earn. Even good people can get caught up into habitual overspending too.

Control Your Spending

One of my friends is an overspender. Nancy is 28 and has a bubbly personality. Every time we catch up for a drink, it's funny to see the guys and girls all stare at her. The guys look at her and think, Dayum!

And then they look over to me and think, What the hell?! The girls on the other hand just check out Nancy from head to toe and don't even pay me any attention. Long straight hair, longer legs, and delicate features does that to people I guess.

I've known Nancy since she first graduated from college. She reached out through our college alumni network for work advice.

Although she didn't make it past the third interview at my old firm, I did give her some tips and introduced her to other personnel that eventually led to another job. We kept in touch and became friends.

Many Insecure People Spend More Than They Earn

As attractive as she is, Nancy revealed to me that she feels ugly. Do you know those already stick thin folks who consistently tell their friends they need to go on a diet? Nancy is somewhat like that with her looks.

With her insecurity, Nancy ends up buying some of the most expensive clothes and accessories on the planet. The LV handbag she carried the last time we met cost over $3,500 alone!

I guess with a $6,500 a month gross salary, she can afford it. But, what about the 25 handbags she admitted to already owning?

As we talked more, she told me she has over $25,000 in credit card debt and feels the only way out is to open up new 0% balance transfer credit cards to prevent her from getting into more debt.

It was a strange conversation because clearly, the best way to get out of debt is to not spend more money. However, to Nancy she felt stuck in a negative debt cycle where spending made her feel beautiful, if only for a little while until she had to spend some more.

Why People Spend More Than They Make

There are six main reasons why people consistently spend more than they earn. Money is mental.


When we lack self-esteem, we turn to things that make us feel better about ourselves. Shopping to fill an inner void can easily cause people to spend more than they earn. In Nancy's case, clothes and accessories made her feel pretty and therefore she continued to spend to keep herself temporarily happy.

We are bombarded on a daily basis by how society thinks we should look and dress. The fact of the matter is the TV and movie industries purposefully choose the most attractive people who barely exist in our daily lives. When all you see is someone really attractive, really wealthy, or even really good, it's inevitable we start feeling inadequate.

Related: The Desire For Money Prestige Is Ruining Your Life


Another super common reason why people consistently spend more than they earn is desire. Desire leads to suffering, but most people don't realize this.

When I was 10 years old, I finally got a pair of $40 Reebok tennis shoes I begged my father for so long. I thanked him profusely and told him I can't believe people spend so much on shoes so regularly.

He then said, $40 shoes have always been around. There are $100 and over shoes too! I realized then that desire is never ending if you don't draw a line and cut things off.

Financially successful people do not spend more than they earn because they prioritize maintaining financial freedom and independence. They don't let desires for material things steer them off course from growing wealth, investing, and planning for retirement.

Keeping up with others

It used to be that you'd see your neighbor's new car and want to buy a new car yourself. Trying to keep up with the Joneses is another big reason people spend more than they earn. Now with Social Media, you get to keep track of all your friend's great lives. You know, the updates from the Maldives, or skydiving in Spain.

We're now bombarded more than ever by people who want to share with us how great their lives are. As a result, we need to do the same, or else we start feeling inadequate. The best thing to do is to shutdown the constant checking and reflect on what you already have.

Lack of knowledge

People don't realize how expensive consumer debt can be. With mortgage interest rates falling to record lows, it's a curiosity to see credit card interest rates still average in the high teens!

If you pay a 15% credit card rate and pay the minimum each month, your credit card debt will double in five years! And if you pay a 20% interest rate, then expect a doubling of debt in only 3.5 years.

The miracle of compounding works equally as well in reverse. There are people who don't realize that if you pay $500 off your $1,000 credit card bill on the last day, the credit card company will still charge you the one month interest on your entire $1,000 balance. Know the rules consumers!

Easy credit

Despite income inequality, there is social equality. Anybody with a pulse can get a credit card with a thousand dollars line of credit nowadays.

Heck, credit card companies are marketing their cards to students who most don't even have a steady income! If there is a plate of French Cruller donuts, I guarantee you that I will eat at least one. Easy credit leads to problems and definitely tempts people to spend more than they earn.

No budget

Anyone who doesn't want to spend more than they earn benefits from a budget. If you don't know how much you make after taxes and retirement contributions, then you don't know how much you can spend.

You'd be surprised how few people actually sit down to make a budget. Sure, the first budget may be a PITA to do, but afterward, everything becomes much more automatic. To improve your finances, grow your wealth, and stop overspending, you have to know how much money is coming in and make sure less is going out.

Logic Is Not Enough To Help People Spend Less Money

Everybody except for the government knows that spending more than you make for an extended period of time leads to financial failure. Yet, there are trillions of dollars in revolving consumer debt outstanding. It's the like the YOLO economy is here to stay!

Life is too easy in developed countries. We become soft, indebted, and lazy, just as creditors want us to be.

If you go to India, where microlending is becoming big business, research what their default rates are compared to the US. Default rates are way below industry norms because each person recognizes how difficult it is to get credit.

In addition, they cherish the credit for a better life, and do not want to disappoint their villages which are depending on such loans and future loans!

People Who Spend More Than They Earn Can Change

Bad habits are hard to break, but it's not impossible. If you or someone you care about has an overspending problem, I have a vast archive of budgeting and savings articles that can help you get your finances back on track.

A first step to change is to understand how good we have it. Do you really need a fourth pair of designer jeans or a new car every three years when the majority of the world can't even afford to pay cash for the typical $21,000 Honda Civic?

If we can visit developing countries to gain more perspective how luxurious our lives are in developed countries, I'm positive we will be able to reduce the act of spending more than we make significantly.

Imagine a world where nobody welched on their bills because they reached their financial tipping point? There would be no housing crisis, no financial crisis, and no need to risk our respective country's economic futures.

Further Reading

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Control your spending. The more you can, the sooner you can reach financial freedom.

76 thoughts on “Why Do Some People Consistently Spend More Than They Earn?”

  1. freak77power

    Salary is not big enough to cover basic needs. I am in debt over 25,000 with credit cards and guess what i don’t buy anything fancy. Student Loan, food, rent and spendings for weddings just added to it. Most people do more spending because they need to satisfy very basic needs. Going to dentist to fix a tooth costed me $700 here where in Europe you can do it for $20. Are you telling me i am over spending because i had to fix my tooth. Fuck that. We are not all born rich and i have bachelor degree in two areas and it seems what i make is a joke, i regret going to school.
    I don’t have iPad and any shit people mentioned above. In this country people are not paid enough.

    1. Thoughts on finding a second job or getting more comprehensive insurance?

      I began this site as a second job and worked on it for 25 hours a week for three years while working a 50 hour a week job.

    2. Victoria Blocker

      Spending for a wedding ? People do not know how to cut expenses?, but they know how to complain. A good start is by not having a wedding. Get married privately. Drive an economic car, small, it’s cheaper in every aspect. Trust me. Cook at home, cheaper. Carry your own lunch. Stop going to bars and restaurants so often. Look at your income and sit down to write a budget. Shop for groceries at Walmart. Shake off that ego! Being solvent and independent is far more rewarding than having to work later in life because you are a slave to a standard of life you cannot afford. Having debt is not a good thing. Avoid it like the plague.

  2. Iam from India In my childhood days i got only 3 pairs of clothes for a year. buying new clothes a dream at that time. people were very happy and enjoy their life at that time. now majority of the indians affordable to buy premium items. but they are not happy. depressive chasing endless pleasures. we cant expect apple tree from a marijuana seed. marijuana seed is our ego. if we cant win our self we endedup as a useless things. thanks for this article. sorry for my english.

  3. Due to the nature of my husband’s career, I am required to accompany him for many social and charitable events – the media is usually present. It is simply astonishing to witness the clothing, shoes and accessories – women are literally trotting around with small fortunes on their backs.
    My closet is filled with a variety of tailored classic designer clothes bought at resale shops.
    Occasionally, during our travels I’ll pop into a Goodwill if we are in an upscale neighborhood.
    Last score was a “day” dress for 2.50 that I washed and hung to dry – paired with a fabulous pair of Ferragamo shoes and matching purse ( bought for a song on eBay) we were off to an event where we had lunch with the Governor. Jewelry was pearl stud earrings (faux)and my 30 year old Cartier tank watch. I would much rather invest my money and continue to support the charities that help those in need than waste it on clothing.

  4. It’s all about education. The reason I say that is I believe we don’t do a good job in the country in educating our children abut personal finance.

  5. first gen American

    Entitlement…the people I know who spend like that often tell me why they deserve whatever item they are overspending on.

  6. Spending is a form of addiction. Incessant surge of ads via new media — mobile phones, iPad etc. is another major factor. Let’s face it, businesses are after weak souls who want to please others at any expense. And there are many weak souls with easy credit fueling their bad habits.

  7. Quite a paradox. We are told to save as much money as we comfortably can yet
    the economy needs us to spend,spend,spend to grow, and recover. Just imagine if
    everyone in the U.S, put away their VISA’s for a year, and lived on cash alone within
    their means.

    It likely would be an economic disaster.
    Now that’s depressing

    1. I would like everybody to spend like crazy so equities, real asset, and other physical assets can rocket higher. Then I would sell everything and just sit on the beach somewhere and blog. Wait a minute.. this happened in 2007 already and I didn’t have the foresight! Darn.

  8. I often tell my friends who tend to spend too much is that the secret to being able to have financial stability is to live within your means. I absolutely agree with you that social media is one of the main culprits on why people spend more. People tend to buy what they want, even though they don’t need those things. Spending beyond your means would only lead you into a vicious debt cycle that is very hard to get out of.

  9. Mortgage Nerd

    I think many people spend too much because they are depressed and it gives them some short term joy. Unfortunately this overspending only leads to more depression which leads to more spending. It’s quite a downward spiral.

  10. Spending more than you earn is so common for people I know who are my age. It’s just that my generation, which you know I’ve written about before, just has to have everything here and now without waiting or saving. It’s very tough to break the cycle. I often wonder where I would be financially if I didn’t move to Grenada which changed the way I look at the world and my finances forever.

  11. Darwin's Money

    Of the various factors, I think the most prominent root cause is self esteem. The same credit is available to virtually all Americans, yet only some show lack of restraint. Many people getting into debt know they shouldn’t be doing it, but need to outwardly display success and keep up with the Joneses. If you have a different mindset and don’t give a crap about people judging you, you won’t get into debt.

    1. It is interesting that the same amount of credit is available to everyone, yet only a minority (?) abuse it to the point of being out of control.

      With any number big enough, you will have a big enough number of abuses.

  12. I myself have fallen into this trap. When I was in college I would live it up and go out with friends and just put it on my card. I’m paying for it now :( Once I get out of credit card debt (shooting for march) I’m done with credit cards!!

    It does feel good to pay down the debt though :)

  13. I personally have no clue what its like to spend such a vast amount more than what you have. I am not saying I was always a saint with money cuz I wasn’t but this type of consumption baffles me. I will say though that I have met plenty of people who have done this. When you ask them why, they will say they felt like they had to or they felt some type of validation in the spending. I think your comment about paying $21,000 for the civic was interesting. I personally don’t have the cash on hand to pay it but I wouldn’t consider ever buying new-not after I saw how quickly a new car depreciate its value! Its going to be always old cars for me but out of choice :)

    1. You might want to come to the Dark Side and see what spending more than you have feels like! Just try and control yourself when you get there b/c it might feel so awesome!

  14. Kim@Eyesonthedollar

    I can only speak for myself, but I think we felt that we “deserved” certain things because we made it through school, living with forced frugality due to lack of income, and now we can qualify for credit. Instant gratification is toxic. You’re right than anyone can get credit. We never looked at the cost as a whole, but rather, can we afford the payments? I don’t blame anyone but myself, but I really wish I had learned better money management skills in school or from my parents, although I probably wouldn’t have listened. Sorry it took 12 years to figure it out.

    1. Hi Kim, that is a great attitude “I don’t blame anyone but myself.” Hopefully at least the credit you spent brought joy during that time. It is fun to also get out of debt too, so in that optimistic way… you could have it good both ways!

  15. Definitely some truth to that. Dinner is a great gesture since you would have spent it on hotel costs anyway. Nice job on the auto pay! Maybe I should consider that given I know what my expenses are real well now that I don’t work anymore.

  16. I do enjoy the “you can’t take it with you mentality.”. Besides, if you die with $1 billion in debt, what are they going to do to you?

    Becomes a moral issue I guess.

    1. “You can’t take it with you” is true but I am surprised not many think “I want to leave a reasonable sized bequeathment for my kids”. I probably am a minority who thinks I should leave my kids with money even though it means not driving the latest model car or wearing designer shoes all the time.

      I do wear designer shoes, just that I buy them only from clearance sections of stores like TJMaxx and don’t own more than 6 pairs of footwear at any time, office shoes, hiking shoes, sneakers, floaters, flip flops & home-footwear all included :-)

  17. I think you’re exactly right that desire leads to suffering. We really don’t need that much to survive and be happy. One simple essential that I am so grateful to have is access to free, clean bathrooms. May sound silly but after traveling to so many places where you have to pay to get in or simply can’t find one, I am loving how there are so many accessible facilities in the US. Does’t take much to keep me happy.

  18. The big thing that I notice in my situation is that there is a push towards a lifestyle of consumer debt. “Get a job……..you need to get a house……start a family……” is the typical thing that i hear from parents and family. But most of them are saddled with tremendous debts that they are struggling to pay. I think what contributes to the mentality is the culture with having to keep up with the Jones’ or you’ll be left behind. For me, I never really got interested in having to own a lot of things, just enough things to be happy and most people in my life tend to think that is odd that I don’t want to have the life of buying things that I’ll never need.

  19. Hi.. newbie here :)
    After finishing college, I got a job to avail credit cards and loans. Boom! Then I got married, tamed my retail escapades a bit but still never understood how money works. Now after 10 years from college graduation, I am enlightened – by paying all the debt I accumulated all those years of ignorance.
    Ignorance – I was raised in a family that never had a savings account. Father, a musician – yeah, starving artist. Mom – breadwinner who never get to make ends meet. There was no financial literacy at home so I spend what I get, even spend the money I hope to get on next payday.

  20. average joe

    Another reason to avoid Facebook and their ilk.

    I used to wonder if I was missing something, but Facebook et al. are just the current Century’s version of navel gazing, albeit in a group setting.

    Fortunately, I’d rather put my money in the bank or investments than in frou-frou bling.

  21. I think that a lot of people are short sighted when it comes to money and things they want. They see the $2500 bag and say “oh, I can pay that off in 2 years”, but they don’t think about what else they could be doing with that money. Lack of knowledge definitely comes into it, but I think that the “I want what I want when I want” mentality that is all around us is the real cause. People don’t want to wait until they have enough saved up, they want it now. People rationalize purchases and talk themselves into buying things they can’t or shouldn’t afford all the time. I think that people need to start thinking longer term and working to delay their instant gratification urge – it will serve them well in the long run. Just my two cents, great article!

  22. charles@gettingarichlife

    My wife has a tendency to look at other women’s purses and tell you if it’s real or fake. These are $2500 LV bags and give her a judgment if they’re doing well. The problem is anyone can afford that, even the minimum wage person who lives at home. She loves LV and before we got married she loved the comments people made when she got a new bag. How long does that last? Add up all the comments and that amounts to an hours worth. How many hours do you need to work to get a $2000 bag to get an hour of compliments?
    Real wealth and success is often not visible, (investment accounts, high cash savings, muni bonds etc.) I was watching a JA Rule interview and someone asked him why he would pay $250,000 for a bracelet, and he said you can’t wear a bank statement to show how much you got out, but you can wear a bracelet. Priceless financial advise on NOT what to do.

    1. JArule makes a good point! Ha!

      So onto your wife…. Does she still buy them $2,000 LV handbags? Or does se have enough? Is you commenting on her bag or beauty not enough?

      1. charles@gettingarichlife.com

        She hasn’t bought a bag due to us recently buying a house. Moving expenses,
        furnishings and things for the house adds up so we’re a bit low on funds.
        We bought a house in Kailua on Oahu, where I believe you wanted to eventually
        move to.

        I knew I was in trouble before we got married when we went bag shopping and I was
        expecting a rack full of bags. Instead my wife likes those bags that has its own shelf
        with a spotlight on it. LV is my nemesis.

        1. Hahaha, nice. Well, if you are able to buy a house in Kailua, life ain’t so bad! I’ve got to check out your blog more!

          I go back to Honolulu a lot. Maybe even end of this month or October. We should get some grub if so! I’m closer to the South Side Diamond Head area.

        2. charles@gettingarichlife.com

          Next time you’re in Hawaii drop me a line and we can grab some grinds at Uncle Bo in Kapahulu they have the best pupus on the island.

  23. There are a lot things that into it. People spend because shopping is relaxing or their recreation. Buying things helps satisfy some psychological need. The only solution is to make the goal more important than those other needs.

  24. The Facebook and twitter effect on “keeping up with the jones'” is huge! Did you know the latest trend in vacations is to hire a professional photographer to take pictures so you can post about your wonderful vacation when you get back? It’s insane!

  25. Ramblin' Ma'am

    “When we lack self-esteem, we turn to things that make us feel better about ourselves.”

    This sounds like something Suze Orman says: “When we feel ‘less than,’ we spend ‘more than.’ ”

    I think a lot of it also has to do with the behavior you see growing up. If you never heard about saving, budgeting, etc. as a kid, you might be less likely to do it as an adult.

  26. Jason Clayton | frugal habits

    I think depression is a big cause for over spending as well.

    I’ve seen this first hand with loved ones. They will spend to make themselves feel “happy”, and then it becomes a cycle that is extremely difficult to break. For this, you have to treat the depression first, and then insert knowledge on how to properly manage money.

  27. “The best thing to do is to shutdown the constant checking and reflect on what you already have.”

    ^ This. Contentment is key to really enjoying your own life and stopping the cycle of unending spending.

    Also, I love your last point. As an avid promoter of all things budgeting, I think that without one you are setting yourself up to fail. And it’s so true, the first few months on a budget are frustrating to figure out, but once you do, it really is pretty automatic. And you then stop wondering where all those lovely dollars have run off to.

  28. Financial Advice for Young Professionals

    Man, this was a good article, bravo. Ok enough ball washing. What really struck home with me was the social media aspect. It’s so true that with how connected we all are and everyone constantly checking in and posting pics of their latest trips, it’s almost a competition to see who has the best life. I think if we could take a step back for a moment we would see that we don’t need to be competing with everyone for attention. Maybe I’ll go off FB for a while and see how it feels :)

  29. I don’t get it, but I don’t have any debt. I think it is important to help coach friends like this into a healthy spending and net worth situation given their income and means. I have helped multiple friends out of debt, and she sounds like someone who could be doing well if she puts her mind to it.

  30. You definitely hit on the big ones. Keeping up with neighbors really has taken on a new ugly face when facebook and twitter hit the scene. Now we have 249 neighbors to keep up with (or however many fb and twitter friends you’ve got). For my wife and me, we realized early on that we can’t afford to do that, we can’t keep up with people, so we don’t even try. But getting to that mindset can be hard… and if I didn’t have my wife insisting on us not keeping up with people, I’m not sure I’d even be to this mindset yet!

    1. Jason Clayton | frugal habits

      Very true – I didn’t think about keeping up with the neighbors and including facebook & twitter in the list. I guess Bill Gates could keep up, but that’s about it.

  31. My 63-year old secretary just went out and bought a new $35K SUV. She told me that she “deserves it.” But I really think she was jealous because her retired postal worker husband had just bought a $30K full size pick-up truck. Funny, now $65K in brand new motor vehicles sit outside in the driveway while the 2-car garage is jam packed with worthless junk.

    Oh yea, they’re still paying $1200 monthly mortgage on their $80K home bought in 1986.

  32. I spent everything and more that both the spouse and I earned on hoarding because I was depressed, anxious and unwilling to face and deal with my traumatic childhood. Once I hit bottom, the hoarding situation began to turn itself around but it has been 4 years of constant attention to why I did what I did and how to stop doing it again in the future. It’s difficult to change because sometimes the realization of what I’ve done is worse than the depression and anxiety caused by the hoarding itself. I just know now that hoarding is not the answer.

    1. You make a good point. The realization of what we’ve done is hard! To own up and face stupid mistakes is painful. Mine was buying a vacation property. I was a dumb ass because of timing and extrapolation of my income and live with it by beig reminded every month when the mortgage is due!

  33. I used to overspend because I was depressed about not being able to find a better job and having crappy retail hours at the one I was at. When my mom was sick, I spent money because I knew that there was nothing that could be done so it was a kind of I’m mad at the world spending and partly a make her as comfy as we can (I spent a lot on extremely soft/warm flannel pjs for her and pillows) I started to break out of both of those cycles when I realized what I was doing but it was a bit too late. I’m now paying for that by not having a lot to spend now because I’m paying off debt.

  34. In Nancy’s case, there is definitely a self-esteem problem, that therapy could solve. For other people it’s peer pressure that can go a long way. My friends have a hard time understanding why I travel all the time and work so little, and when I say it’s because I don’t drop $100 a night on drinks or $300 on shoes, they just shrug. The transition to normal spending is just as hard as normal eating for an anorexic or a very fat person, you need to go deep inside to find the reason why you spend too much in the first place before you can try to fix the problem.

    1. You’re right. There has to be something deep inside of Nancy that happened that I or many other people dont know about. I’m not at that stage in our relationship to find out.

  35. People are stuck in a negative debt cycle and she needs help. Only a few people can get out of debt by themselves if they are already in a negative cycle. It’s easier to stay the course and keep doing what they were doing. Perhaps she can start reading blogs like man vs debt to get some inspiration. If she need more help, then perhaps she should try talk therapy. It’s not cheap, but if it can change her behavior then it’s a good investment.

  36. I think it is the habits that make or break you. If you start spending all you make out of school it is quite hard to reign this in later in life… even worse if you are comfortable carrying outstanding credit balances.


  37. You wrote, “when the majority of the world can’t even afford to pay cash for the typical $21,000 Honda Civic?”

    The vast majority of Americans can’t even afford to pay cash for a Honda Civic!!! When I bought my Honda ACCORD in 2005 – I paid about $21,000 and yes I paid cash!

    Why do people overspend – they care way to much what other people think about them!!! I make good money but I do not have cable, do not have a smart phone. I actually have a prepaid cell phone.

    I could afford all the “necessities” that other American have that I do not – but I just find no need for all those necessities.

    I absolutely love seeing people in less developed countries with very little money but BIG SMILES on there faces! Money does NOT buy happiness!!!!!

    1. I totally agree with you…people are way to concerned about what other people think of them at ANY COST! It’s very sad, indeed.

      We are like you in that we, too, can afford many of the extras yet chose to do without them (cable, smart phone, flat screen TVs, etc.) We ARE the millionaires next door and nobody would ever know what we have by the simple, very happy life we live. Husband just took early retirement and we are living the life! People will say “How can you guys afford to retire so young?” I really want to respond, “well, we don’t buy a new car every 3 years, or go out to eat 5 times a week, or buy designer apparel, or live in a big-ass house that we don’t need, with BIG bills/expenses to go along with it and all of the “stuff” you need to fill it, should I stop now?”

      So many people have this “instant gratification” attitude – “I want it, I deserve it” that makes me crazy! But I guess they are sacrificing their future freedom (retirement) for the instant pleasures they feel they deserve and MUST have now. Many of them will be working till they die, unfortunately.

      I also agree that you can NEVER start teaching children about money (budgeting, saving) too young. I am constantly talking, showing, helping my nieces/nephews with money and explaining WHY they need to save, give to church, spend just a little of what they earn. I hope that it will have an impact on them later down the road and save them from financial suicide that so many are committing these days.

    2. David, I truly hope Americans and other folks who live in cushy developed countries can see the world and specifically developing countries more.

      We need to get out of Our bubble!

      1. Amen!

        I love my time in the developing world – some of my greatest memories are from my time in Laos – 3 seperate 1 month long trips. The children and also the adults just have a love of life.

        This year we are of to Sri Lanka for a month – have never been and am looking forward to it.

  38. psychology and education are two things I feel I see most often. I find it really sad. I personally think we should put out more education regarding financial matters in standard school hours.

    But that won’t help everybody; one cannot force others’ decisions. I’d also say that people should be allowed to do as they see fit, but that I should not be screwed over as a result. That means: government lending takes on little default risk (like the stickiness of student loans through bankruptcy), and people receiving money for free not being able to be irresponsible.

    I am in a unique situation where somebody close to me lives a completely government-subsidized life and has absolutely no financial sense despite being old enough to be my mother. Think “enough free money to cover all basic expenses but unable to prioritize rent over dresses and nights out with friends”. This burdens family members’ livelihood as they help out, they view helping someone else’s irresponsibility as an irrevocable obligation based on family ties … of course they can do that, but I personally find it amazing that they can deal with such a lack of respect towards themselves. Definitely an interesting (and IMO depressing) situation.

    Oh – and there’s LOTS of credit card debt involved >_<

    "building a picture of wealth, because they can’t exactly walk around with an ATM receipt taped to their forehead" – so true.

    A friend just out of school was also surprised to hear the basic premise of "The Millionaire Next Door" while starting a first job along with the first dose of credit card debt. SMH.

  39. I haven’t ever been a person who spends more than they earn so I can’t say from experience. I would think a lot of people don’t know how much they spend each month which makes it easier to spend more than you earn. I also see a lot of recent graduates trying to live the same lifestyle their parents provided from them while they grew up except now the kids have an entry level salary that can’t afford the same lifestyle.

    1. I agree with this comment 100%.

      I have one relative in particular who simply does not pay attention to how much she spends. She’s always had enough, so she just didn’t need to worry. (Plus, her parents once told them ‘money is to be spent.’) Moreover, her husband doesn’t like to discuss money or budgeting, which doesn’t help. Now that they’re close to retirement, they’re worried about whether they’ll make ends meet with less income.

      So some of it is not paying attention, some of it is lack of communication, and some of it is feeling that a budget would be constraining or some sort of limit on their own personal freedom. Some of it can also be placing too much importance on certain sentimental possessions.

      For example, I have a friend who works as a family financial planner. He’s been asked by local community leaders to provide pro bono counseling to help financially struggling couples from time to time. He once told me that of all the times that he’s been asked to step in, the families were all living beyond their means – usually because they had too much house. In only ONE case did the family solve their problems – by choosing to downgrade their housing. The rest simply refused to lower their inflated standard of living.

      I also think A LOT of all this goes back to parenting. Some children grow up in financially savvy homes where the parents provide a good financial education and teach the value of giving up some things now in order to meet larger goals in the future. Other children do not.

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