Is it human nature to live beyond our means?

by StepChange Debt Charity on 03 December 2011  |  4 comments
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People have spent more than they had for centuries!

On a daily basis CCCS deals with all sorts of people across the salary spectrum and from many different backgrounds and professions. After all, a high-powered executive can get into the same situation as a supermarket shelf stacker if they’ve lived beyond their means and failed to budget correctly.

It’s not just the squeezed middle and the working class that are being hit; even people earning £100,000 plus per year are struggling.

This was brought home by chatting with my next door neighbour. He’s a down-to-earth type character who expresses no surprise at the current personal debt crisis. He says that as far back as he can remember people have always struggled for money just before the next payday.

He believes that the problem is that while in the distant past people accepted the struggle and tried to budget better, in more recent times when there was “too much month for some people’s money” we got another credit card, loan or overdraft. We refused to accept that we had no money available.

Debt slaves

All we hear from the news these days are the words ‘debt crisis’, be it in relation to governments, countries, currencies or households. But debt has been around since the beginning of the civilised world.

In ancient Greece people became 'debt slaves' after they lived beyond their means. Today’s personal debt crises are essentially old news. People have always spent more than they earned or suffered a life shock such as redundancy or job loss that they hadn’t made provision for.

Despite their incomes, many households have struggled before payday, or have no savings to fall back on in case of emergency. Over the years how many people have made no provision for the future and have simply lived from month to month?

But in the past few decades credit has become easily available and morally acceptable – it’s no longer seen as debt slavery. As a result of that, budgeting is more likely to go out of the window, both for the high-powered executive and the shelf stacker.

It’s not what your earn it’s what you spend

Using credit for daily living costs is one of the first signs that your budget isn’t working, unless you’re committed to paying it in full every month. You often only realise this when it’s too late. Your first reaction when one credit card is maxed out is to go and get another (rather than facing up to it), until eventually your money is no longer your own.

The high-powered executive and shelf stacker both need to learn the same lessons. It’s not what you earn (although it’s human nature that we all want to earn more), it’s usually how you spend it that causes the underlying issues.

On top of learning that spending less than we earn will keep us in good stead (as Micawber famously stated) we all need to learn that in order to put a financial firewall around ourselves we also need adequate savings to protect us from life’s bumps in the road.

2012 money resolutions

Going into what will be an economically tough 2012, it’s worth considering a New Year resolution to watch your expenditure and sure up your savings (read our 2011 money resolutions for ideas for pledges), especially if you find that as your payday approaches you’re using credit to survive. You can start by making a budget.

If you have been using credit to live and you feel like you’ve overcommitted yourself you might want to use our free online debt help tool CCCS Debt Remedy. It offers free, confidential and impartial advice.

We’ll focus on releasing you from debt slavery whether you’re a high-powered executive or a shelf-stacker.