Avoid this Common Spending Mistake That Leads Most People into Debt

Updated: September 19, 2023

Over the years, I’ve helped people fix their budgets to improve their finances. Most of the time, the primary cause of their high spending is when they use money to fix a problem that money can’t fix.

Money is a tool. And we can use it to help solve a lot of things.

You don’t know how to drive a car or bake a cake? You can fix that by hiring someone to teach you or by enrolling in a class.

Do you want to have additional sources of income? You can save up and use the money as capital to start a business or perhaps buy a rental property.

Would you like to prepare for your retirement? You can start investing now so you can build a good amount of wealth to ensure that you retire in comfort.

For these concerns, money plays a major role in helping you address and fix your problems.

Money as a Quick Fix

However, sometimes we use money as a Band-Aid solution — as a quick fix to our problems. And when we do, it often results in wasted money and significant debt.

What do I mean by using money as a Band-Aid solution or a quick fix? Let me explain through a couple of examples.

The Gift Giver

Most OFWs I’ve talked to feel guilty about not being able to spend time with their growing children because they’re working overseas.

So, to make up for their absence, they shower them with expensive gifts and overspend whenever they’re home. I’ve honestly lost count of visiting OFW friends telling me they went over their intended budget during their vacation.

Of course, there’s nothing wrong with spending on these times, but it’s important to stay within what you can afford.

Spending more won’t fix your situation, and it probably just makes it a little bit harder for you to save enough money to come back home for good eventually.

The Escape Artist

Another example, which I also often notice among OFWs, is using retail therapy to escape dealing with boredom, pain, loneliness, or depression.

After almost 10 years of working abroad, a friend hasn’t been able to save enough capital to franchise a business or buy a condo rental property so he can come back home.

This was his financial goal when he left, and it is still probably what he wants to do. However, I’ve noticed that whenever he’s homesick, he distracts himself with unnecessary spending, like buying a car or getting into an expensive hobby.

Today, he has three cars and a crateful of camera lenses and expensive accessories, which he doesn’t use much and with no other real purpose except to give him a false sense of financial security and distract him from being homesick.

Again, there’s nothing wrong with buying these, especially if you can afford them anyway. But it’s important to be self-aware of why you’re buying these things.

My friend is using his money as a quick fix for his loneliness. And when you do that, it becomes a vicious spending cycle because the good feeling you get from retail therapy never lasts.

Deal with The Real Issues

I’ve made this mistake before, and I still honestly do sometimes, especially in today’s world where it’s easy to get instant gratification.

Several years ago, I wanted to lose weight, so I enrolled myself in an expensive gym. My hope was that I’d now be more motivated to exercise because I have convenient access to a hip and modern fitness facility.

However, I found myself not going to the gym at all. At best, it would just be once or twice a week, which isn’t really enough if I want to shed my extra pounds.

Eventually, I realized that the problem of why I was overweight was because I didn’t prioritize exercise. I only went to the gym when I had free time instead of actually making the time on my schedule to go and visit.

The problem that needed fixing if I wanted to be more healthy was my priorities and how I manage my time to reflect those priorities.

I can spend thousands of pesos on gym memberships, diet meal delivery programs, exercise, and sports equipment — but all these are just a waste of money if I don’t deal with the real issue — I didn’t consider my health a top priority.

Today, I’m enrolled in a more affordable gym, I’ve stopped my diet meal delivery subscription, and I actively hold off from getting into the latest sports fad.

Doing so allowed me to save more money, which I now plan to use for travel. And I use that fact as my motivation to exercise more often by telling myself that it would be hard to travel if I’m not fit and healthy.

Currently, I’m still overweight, but I’ve been shedding off pounds (very) slowly but surely. And my medical and physical exams all show good results, with numbers falling within the healthy range.

Getting those six-pack abs may not be a priority for me, but being healthy is. Thus, I make the time to exercise and work out, even for just a few minutes every day, and that’s good enough for me for now.

What’s important is that I’ve stopped spending unnecessarily on quick fixes to lose weight, which does nothing other than make me feel less guilty about being overweight by creating an illusion that I’m doing something about it.

Be Better

Stop spending unnecessarily on things to fix problems that money can’t fix.

Don’t be stuck with Band-Aid solutions when what you really need is a bitter pill that provides a more effective way to address and solve your issues and concerns.

Be better at self-awareness, and watch your life improve without getting into excess spending and impractical debt.

What to do next: Click here to start your financial journey with IMG Wealth Academy

One comment

  1. Mr Fitz, excellent insights in this article. I can empathize with “The Escape Artists” Fortunately, I was able to resists the temptation at times I had to be away from home base. I received an “awakening ” not long ago from my beautiful bride of 3 1/2 years. I asked her why she no longer wears some of the jewelry she collected from her surplus income and the truth came out. Both of her brothers got into financial jams at the same time. My wife secretly pawned most of her collection to help them out. Now, one of the reasons I married again after losing my first wife to cancer 15 years ago was how well my new bride handles money. Her bills were always current, food stocked for the month ahead until her next checks arrived etc. etc. Then I leaned more. When I wife collected jewelry in the past, she always bought below value and if or when there was an emergency free cash could not cover, that jewelry could be pawned and NOT at a loss. She actually made a little money pawning her items to help her family. I suggest if anyone collects something to “kill the boredom ” collect an asset that will NOT lose value. If a bad day comes, at least you will NOT lose a lot if you must cash out. Most cars are NOT an investment, only transportation. A photographer earns a living with good tools but as a hobby, you only own a wasting asset. THINK before you spend.

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