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Chaz SomersNovember 17, 20205 min read

The financial snowball effect: How do we stop it?

avatar Chaz Somers

Chaz Somers started his professional career as a part-time social media contractor at ZayZoon and since then, has evolved into a full-time content marketing associate. Chaz’s love for branding and storytelling has led him to blog writing, clothing design and video production all within ZayZoon.

Social-ZZ-Infog-3Saving cash is never an easy task unless you have some type of money tree. Whether it’s expenses that seemingly come out of nowhere or an occasional urge to treat yourself, sometimes it feels like the only solution is to win the lottery.

While the concept of saving money is simple and straightforward, the reality is anything but. In fact, 57%  of Americans don't have $500 saved in case of an emergency. When sudden financial trouble does arise, that money needs to come from somewhere. Many people will end up relying on credit or a predatory loan to help them in the short term. This quick-fix just digs them deeper into a financial hole.

Most unexpected expenses won't cost more than $500 but even smaller ones can add up very quickly if not managed properly. How? It's a snowball effect. While one small fee isn't going to instantly spin you into bankruptcy, when habits develop and are combined with additional fees and cost, it can put you in a tough financial position. 

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Unless you studied finance or were fortunate enough to have someone teach you about it in your personal life, the odds of you having some bad spending habits aren’t particularly in your favor, but that’s okay! Everyone’s story is different so in order to figure out where you may be going wrong, you will need to take a step back and analyze exactly how you spend your money. It’s very easy to get caught up in your day-to-day spending but the key is being conscious of how you operate on a bigger scale. 

A common problem with people struggling to achieve Financial Wellness is impulsive buying. Although this is certainly something that everyone has been guilty of to a certain extent in the past, it can become a problem people really struggle with. It may start as simple as grabbing an interesting product you’ve never seen before at the grocery store or picking up something that catches your eye at the cash register, however, this can quickly evolve. Spending money can release dopamine into your brain and become legitimately addicting. If this happens to you and isn’t something you’re consciously careful of, it can become a major issue. Impulse buying, at its worst, can evolve into Emotional Buying. 

Emotional Buying is the act of buying a product or service simply because it makes you feel a certain way, not because you actually need or even necessarily want what you’re purchasing. This is how shopping addictions are born and unless you’re fortunate enough to have extra disposable income, they can become a major issue, not just financially, but psychologically as well. The only way to really combat these two major problems is to stay mindful of them, the problem only gets out of hand when people start doing it often without even realizing. 

Just like spending money you do have can be an issue, so can spending money you don’t have. Accruing credit card debt is common throughout North America and nothing to be ashamed of, but like impulsive buying, can become a major financial issue if not addressed before things get out of control. Credit Cards can be extremely beneficial when it comes to buying things you need and/or building up credit with banks for a potential mortgage one day. However, spending money that isn’t yours is a slippery slope for some, this can bloom into some terrible spending habits that could live on to haunt you for a very long time. The key to credit card usage is to never live above your means and to make sure you’ll be able to pay back what you’ve borrowed on time to avoid unnecessary fees. 

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Aside from personal habits you need to be conscious of, another reason people have a hard time saving money is all the fees. Bank fees are another expense most aren’t overly conscious of. Avoiding these unnecessary fees is crucial when trying to save money and is relatively easy as long as you stay on top of them. ATM and overdraft fees are the most prominent and should only ever be used in emergencies. They may be necessary at times but if encountered regularly changes need to be made. The solution is relatively simple, avoid ATM fees by making as few withdrawals as possible and only using ATMs affiliated with your bank (Other banks’ ATMs require extra fees). For Bank Overdraft Fees, look into overdraft protectors or reminders. Most banking apps have a service that will notify you if you go into overdraft so that you can transfer money into the account and avoid it, this is extremely helpful for people that just simply forget to keep enough money in their checking account.  

So, what’s the verdict? The most important thing about saving is consciousness. Staying conscious of not only what comes in, but everything that goes out. Obviously, a lot easier said than done, especially if you try to do it all in your head but the best way to achieve this is by budgeting. The more in-depth and in-detail you get with your budget, the better! Some like to create their own budgets from scratch, others like to use traditional budgeting methods they find online or read in books. Either of these options is acceptable but it is important to make sure you’re constantly making any tweaks or changes necessary to ensure the budget suits you like your favorite pair of pants.

If finding the right budget has proven itself more difficult than you thought, try checking out ZayZoon’s blog post on the matter, Is Your Budget Right For You?

If you'd like to learn more about how ZayZoon is looking to help, go to



This is part of our 10 Facts on Wages On-Demand series, to see all the existing pieces, click here.