Average Canadian non-mortgage debt stands at a whopping $29,312 per person, including an average credit card balance of $4,154. This is caused by overspending on entertainment, luxury items, vacations, clothing and expensive gifts. Learn the types of over-spenders in this article.

All of us strive for financial independence. We set up goals for ourselves, but oftentimes, we seem to get nowhere, fast. Our poor spending habits are often what prevents us from achieving the financial freedom we dream of. Identifying that your spending habits can be improved on is a great start to overhauling your financial behaviour. Furthermore, understanding the type of over spender you are, will help you tailor the solution to your exact situation. Below are the main types of over spenders:

1. The Impulse Spender: Impulse Spenders allow their emotional state to dictate their behaviour. Whether it means buying yourself shoes when you’ve had a bad day, or spending on a designer item because you want to impress someone. An impulsive purchase can usually be identified when it leads to feelings of regret. The most common reaction in this case is to quit spending “cold turkey”. This rarely works as it builds a punitive cycle. It’s better to take a step back, evaluate your needs and your own strengths, and then create a strategy based on you and your circumstances.

2. The Accidental Spender: The Accidental Spender is the one who never knows where the dollars go. They don’t really think about costs, and they definitely don’t like to feel comfortable in a state of financial restraint. In short, the Accidental Spender doesn’t pay much attention to where the money goes, because they are focusing on other priorities. This segment often includes individuals who may avoid thinking about their finances for deeper reasons. The Accidental Spender reacts by procrastinating on taking action to resolve their financial struggles. Awareness on where the dollars are really going is helpful for this group. Also, recognizing that gaining control over your financial behaviour is a very rewarding outcome and is motivational.

3. The Deal Shopper. If you find yourself buying items because of the incredible discount on them, you are likely a Deal Shopper. No matter what you purchase, you should always consider whether you need the item, and never be driven by the discount or a special offer only. This type of over spender may benefit from following strict category budgets. Combined with the love for deals, it is guaranteed to bring great results in controlling the overall expenditure.

4. Keeping Up With the Joneses. Do you find yourself buying items because they elevate your status, or because someone you look up to has that item? This is a dangerous path to do down, as often our budgets or resources do not match those of the Joneses. We end up chasing the unattainable lifestyle wile putting ourselves into further debt. Take a step back, evaluate your actual needs and build a strong budget reflecting your situation. You will gain control over your financials and the triggers for purchasing.

5. The Secret Shopper. Do you have a credit card you’ve taken out without telling your spouse? Do you make purchases without telling your loved ones and end up stashing them away before anyone notices? Addressing the reasons for this behaviour is extremely important, as it can result in trust issues in your family, ruin friendships and relationships.

6. The Extravagant Gift Giver. Do you find yourself overspending over holiday season? Trying to impress your friends and family with expensive gifts, wine, gadgets? Do you believe that expensive and luxurious gifts will win their love? Realizing that this type of behaviour will in no way make one like you more, is a great first step. Allocating a strict budget for gifts for selected circle of loved ones is a great tool to gain control over your overspending.

There are many tools that will help you manage your spending, budgeting and sticking to a plan. Understanding the root of the problem is an important step towards your financial independence. To learn how to make decisions like a CEO and take charge of your life, your decision and your budget, check out our Be Your Own CEO Checklist.