If you find that you’re always emptying your account – or worse, having a negative balance – you should have some concerns. You may not notice how you are overspending to try and maintain your current lifestyle.
The truth is you don’t have to change much to regain control. All you need is to find ways to curb the spending so you’ll have the money you can allocate to other things.
Controlling your spending can lead to less stress and make it easy to manage your money.
In this post, we’ll take a look at why you might be overspending and the strategies you can use to curb this bad habit.
Overspending can happen in different ways. Often people have problems making money-related decisions leading to this.
They either spend beyond their means or don’t have enough to cover during emergencies. It is usually a combination of both.
You can overspend if you start using short-term loans and credit cards to try and compensate when something unexpected occurs.
According to experts, overspending usually happens over time. It’s a habit formed when people gradually increase the money they use.
Even as their income increases, they create ways to spend that added income without realizing they are doing it.
Others have difficulty because they’ve associated spending with stress relief. Some people have weight problems because they translate food as an anti-stressor, and money can act similarly.
“It’s not your salary that makes you rich, it’s your spending habits.” - Charles A. Jaffe
People also grow up in environments where there is pressure to spend money. We see it in the movies, and companies always try to sell their wares through advertisements.
The compulsion of being in a circle that overspends creates a loop where someone becomes used to to spending too much money.
You can even see strategies where companies try to mimic scarcity. A limited-time sale or a limited number of items left are all reasons to go on a splurge.
Social media has exacerbated this fact. People see what others have through their profiles and want to emulate it, even though they don’t have the means to do it consistently.
People also associate spending with a happy lifestyle when it's not the usual case.
You’ve likely felt that sensation where you know saving money will lead you to a much better emotional and mental place. But it’s important to note that spending money won’t solve your problems – it will only create new ones.
It’s not all doom and gloom, though, because you can take charge of this habit. Here are some ways you can begin controlling your spending:
Have you taken time to try and track your expenses in a month? You may find it surprising your first time doing it.
You’ll notice how the little things you spend add up each month. It may seem like a small cost at the time, but they affect how much money is in your pockets before long.
You’ll see how much you spend with your receipts and card statements. Gather them all through pen and paper or an app.
You can categorize them and separate the essential from what is not.
From there, you can begin setting limits to how much you spend in each category. You can project how much you save if you minimize the money you use for entertainment.
You can also adjust spending and move it to other areas.
Not only that, you’ll get an idea if some things are costing way too much for your budget. You can cut them off if they’re not essential.
Otherwise, it would be best to look for more affordable alternatives.
Try to enforce a rule to never spend on an impulse. It will be difficult, but that’s where your budget comes in. If you know how much money is for a specific purchase, you won’t feel the guilt of spending it when the time comes that you need it.
You can curb spending by spreading it out over months instead of using all the extra money you have from your paycheck.
Even for groceries, you can put a list and refer to it. When you want to buy something out of that list, don’t get it yet until you’ve completed it.
From there, you can see if there is any way for your budget to accommodate the extra purchases. If not, move on and realize that you can live for some time without it.
By planning, you can also allot money for big-ticket purchases. If you want to buy a new gadget worth $1000, you can save $250 a month and buy it after four months instead.
The $750 you saved from each of those months can be used for savings, investments, retirement, and more.
Strive to use your credit cards to the minimum. While they provide some benefits, remember that you are usually paying more than intended with them.
With each purchase that you borrow using the card, you’ll pay more because of fees and interest rates. Miss a payment, and they become difficult to remove because of compounding interest.
If you have the means to do so, always use cash. Whether you’re paying digitally or otherwise, using the money you have at the moment will save you from stress and headaches.
Why pay the extra 3-16% when you can opt to pay the amount without any added costs? Learning to live within your means can become the stepping stone you need to avoid overspending.
Not only that, going the wrong direction with credit cards will only hurt your credit score. Don’t use it as a crutch for your payments when you don’t have the money.
Instead, use them as a means to improve your credit score, only spending money that you have.
Credit cards are one of the biggest problems Americans have today. Taking some time to avoid the fees can save you a lot of money in the long run.
If you’re concerned about how much you’re spending using it, check your balances and ensure you don’t go over their limit.
There may be some things taking money from you without knowing. For example, taking a look at your automatic payments may reveal subscriptions that you no longer need.
Cutting them off can help add back money to your monthly balance.
It’s vital to list your expenses to know how much money you’re getting and where they’re going. You may be spending money on items not in use, wasting the money you can use for other things.
This concept also goes back to your spending habits. Overspending means you’re likely using the money for items you don’t necessarily need.
An alternative is that you may need it, but you’re allocating too much money for it.
One common category for this is entertainment. Going out to watch a movie, a sports event, or spending on hobbies are all fun until you lose most of your money doing them.
Try to lessen the frequency of your entertainment-related costs and see if that has any effect.
Food is also another big category that people tend to overspend on. You might have a craving for burgers one day, for example, and then one thing leads to another and you’ve spent $50 extra that month.
The money you spent there could’ve been used to add to savings for a week if you cooked at home. While these scenarios can sometimes be unavoidable, you can try to lessen costs by employing some of these strategies:
For groceries, one option is to look for more affordable options. Taking time for coupons and promotions can also yield lots of savings.
You get food for the week or the month while still having money to spare. Your mindset should be that there’s always a way to save money for whatever expenses you have.
Experts say that overspending has direct ties to emotions and the psyche. There are often triggers that cause a person to spend money due to how close they associate it with stress relief or positive emotions.
Avoiding these can help you curb your spending and have better control over your finances. Here are some examples of how triggers can happen:
Gathering three to six months' worth of expenses as a savings or emergency account can be an overwhelming ordeal. If you’re starting from zero, saving for something significant may seem like an unattainable task.
Instead of dealing with a massive goal at the start, it’s best to have short-term goals that build up to it.
You’ll feel motivated and positive if you reach those short-term goals. For example, instead of saving $1000, try saving $100 first.
Work your way up until you reach your destination. Starting small helps you build the habit and makes it easier to spend money.
You also won’t have to resort to drastic measures to save. At the start, you’ll only need to cut down a few things until you’ve become accustomed to a new way of saving.
Building habits like this can shift your thinking and prioritize saving money. Eventually, you’ll get to a point where savings happen without much effort.
Your money should be growing instead of staying stagnant in one location. Even having it in a savings account can grow over time.
You can curb spending by realizing that your money can be better off working to help you achieve a more comfortable future.
You’ll stay motivated to save, knowing that you can use the money to achieve financial freedom. One of the most common ways to do this is through investments, and there are many paths to take there.
If you want to avoid the troubles that come with lacking financials, you’ll need to take small steps to reach your goal. Consider each purchase and always step back before deciding if you truly want to buy something.
You may be buying it because of pressure, stress, or a bad mood. When we start being more aware of our situation, we can begin heading on the right path.
If you ever need help creating avenues to save and grow your money, consider joining 121 FCU. We’ve helped many of our members curb their spending through our advice and plans.
We’re always ready to help with any of your financial concerns.