You can think that it is easy to recognize excessive personal spending when you observe someone buying goods and services according to what appears to be an extensive appetite of wants. This observation maybe true, but is at risk of passing judgment, and perhaps not having enough information about the person being observed. A better approach is to evaluate personal spending within the context of fulfilling a desired goal and then decide if the spending pattern can support the resource need to accomplish the desired goal. The following is a basic plan that can quickly help you to determine excessive personal spending.
1. Establish a future reference by visualizing your desired position three to five years from today. It is best to establish the long-term position first before the short-term in order to remain focused and motivated
2. Write down this visualization in a statement titled”Vision Statement” and include a projected emotional response as you journey towards fulfillment
3. Write an achievement goal that is essential to realizing your vision within each of the following areas such as: Social – e.g. Marriage, or Children or a major vacation or a visit to at least three continents; Educational – To receive an advanced degree or certificate or Career change; Financial – Double household income or Start a business or Establish a fund for your children education; and Personal health -Actively engaged in the practice of “good” health habits
4. Project the dollar amount that will be needed to achieve your goals and realize your vision within three to five years
5. Determine your current spending pattern/month to see if you will have the resources or if you will need to make adjustments in order to realize your vision in three to five years
This step by step method allows a self-evaluation for determining your spending pattern and provides data for you to decide if you are spending excessively.