5 Signs You Have a Spending Problem (and What To Do About It)

Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page. APY = Annual Percentage Yield


  • And estimated 5% to 9% of Americans have a compulsive spending disorder.
  • The first step is identifying whether you have a problem and taking the steps to change.

It's easy to slip into overspending, but also possible to find your way out.

It can be tough to determine how "normal" your spending habits are. After all, you may not be privy to how other people in your income bracket spend (or don't spend) their money. Take a scroll through this list. If you see a little too much of yourself for comfort, you may have a spending problem.

One word of caution before you read any further, though. If these behaviors feel familiar, be kind to yourself. We've all had financial quirks we've worked to overcome. They're not character flaws or insurmountable problems.

1. You max out your credit cards

If you max out your cards or don't know how much you owe on them, it's likely because you're overspending.

What's interesting -- and scary -- about credit cards is how much more we're willing to spend when we don't pull cash out to pay. An older MIT study (from 2001) found that people are likely to spend less time considering a purchase when paying by credit card, and are willing to pay much more for something than if they were paying cash. A 2018 U.S. Consumer Payment Study by TSYS Payment Solutions found the same thing. In fact, the TSYS study indicated that consumers will spend 83% more on credit cards than they will spend in cash.

Paying by credit card does not feel like a loss, particularly compared to what it feels like to pay by cash. Researchers refer to the phenomenon as "friction-free spending." They have even found that looking at a credit card image is enough to inspire people to spend.

Let's say you have $10 in your pocket, and buying a coffee will cost $7. That drink will take a big bite of your available funds. However, charging the coffee on a credit card with a $5,000 limit makes it feel as though you're spending far less of your available cash.

Try this instead: Adopt a cash-only policy any time you go out. Take only the amount you can afford to spend and stick to that limit. Leave your cards at home so you're not tempted to use them, and focus on paying off existing credit card debt to break the cycle.

2. Shopping relaxes you

The term "retail therapy" may be overused, but it aptly describes how some people find comfort in shopping. If that's you, take a moment to ask yourself why. What are you finding comfort from? Is it a stressful job, messy kids at home, or financial concerns? Identifying what sends you straight to your favorite store is the first step in getting a handle on your finances.

Try this instead: Let's say you're concerned about losing your job. Rather than just wait for it to happen, plan ways you can come out ahead. Dust off your resume and join a networking group. Use this time to start a small business from your home. In other words, focus your attention on making your life better. It's possible that addressing the issue at the heart of your stress will get you out of the habit of retail therapy.

3. Your emergency savings account is small or non-existent

The number of Americans with little to no money in savings is well documented. If you're among those without enough to cover an emergency, look at your spending habits to see if they may be part of the problem.

Try this instead: The old Desmond Tutu saying, "There is only one way to eat an elephant: a bite at a time," was not actually referring to elephants. Tutu meant that big things (like saving for the future) can seem overwhelming. Still, they can be accomplished by doing a little at a time. If your goal is to save $200 each month, break it into bite-size pieces by putting $50 per week into your savings account. Rather than make plans to spend bonuses, tax refunds, or other "found" money, stick it away in savings. If the most you can come up with to save is $1 per day, faithfully put away $1 a day.

One bonus of focusing on savings is that you may become more addicted to saving money than spending. It is possible to make the switch.

4. You pay bills late or not at all

Not having enough money to pay your bills each month could indicate a spending problem. In addition to the damage late and missed payments inflict on your credit score, there's the added stress of wondering how you're going to catch up.

Try this instead:

  • Pay bills first each month, before spending anything on discretionary expenses.
  • Set up auto-pay for all your bills, including your mortgage or rent, auto payment, credit cards, daycare, and utilities.
  • Only when your bills are covered do you know how much you have left for things like entertainment, dining out, and new clothes.

5. You've taken money from your retirement account

If you've ever taken money from a retirement account to cover everyday bills (and it wasn't in the middle of a global pandemic), it may indicate a problem. Borrowing from your nest egg today could leave you in a precarious position in the future, adding to your financial stress. If you're spending more than you should on things you don't need, do not punish your future self by taking funds from an account meant to protect you as you age.

Try this instead:

  • Consider retirement funds off-limits, no matter what's going on.
  • Take on a part-time job, rent out a room in your house, or otherwise find the funds you need to pay debts.

A final note

If you see any of your behaviors reflected in this article, be kind to yourself. According to The Shulman Center, between 5% and 9% of Americans have a compulsive shopping disorder.

Fortunately, there's help available. Debtors Anonymous offers hope to anyone suffering from the effects of overspending, with meetings available across the country, online, and via phone. And if you're buried in debt and not sure how to get out, The National Foundation for Credit Counseling has consumer credit and debt counselors to help you find the light at the end of the tunnel.

These savings accounts are FDIC insured and could earn you 12x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 11x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023.

Two of our top online savings account picks:

Rates as of Sep 28, 2023 Ratings Methodology
American Express National BankSoFi Checking and Savings
Member FDIC.Member FDIC.
Rating image, 4.00 out of 5 stars.
4.00 stars
Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor
Rating image, 4.75 out of 5 stars.
4.75 stars
Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor

APY: 4.30%

APY: up to 4.50%

Min. to earn APY: $1

Min. to earn APY: $1

Our Research Expert

Related Articles

View All Articles Learn More Link Arrow