Extravagant spending is seen by many as a sign of success. After all, if you can afford to spend lavishly, that must mean you're doing something right, right? Wrong. In truth, extravagant spending is a surefire recipe for financial ruin. Here's why.
Extravagant Spenders are Afraid of Becoming Poor
One of the main reasons people become extravagant spenders is because they're afraid of becoming poor. They think that by surrounding themselves with luxury items, they will somehow stave off poverty. But the truth is, a lack of material possessions doesn't cause poverty—a lack of access to opportunity causes it. People raised in poverty don't have the same opportunities as those presented in middle-class or upper-class families. They don't have the same access to quality education or job training, which makes it harder for them to find good-paying jobs. And even when they do find work, they often don't make enough money to escape poverty.
Extravagant Spending Leads to Financial Ruins
Another reason why extravagant spending is a recipe for financial ruin is that it leads to debt. If you spend more money than you have in the bank, you will have to put the difference on a credit card or take out a loan. And if you can't pay off your debts, you'll end up paying interest on those debts—an expense that you could have avoided if you had just saved your money in the first place. Also, carrying around large amounts of debt can be stressful and lead to other problems like anxiety and depression.
It's best to avoid extravagant spending to avoid financial ruin. While it may seem harmless to let off some steam, the truth is that it can lead to debt, stress, and other problems down the road. So save your money and your sanity by avoiding extravagance altogether.