Overspending is a widespread problem that a lot of people face. A habit that can seriously
wreck a one's finances, especially their ability to save. If spending less and saving more seems
to be difficult for you, sheer will alone will not make the change. But hopefully,
the strategies below can help you put the habit to rest and stay clear of debts.
1. Pay in cash Using cash is one of the simplest ways to curb
your spending. A lot of people find that using their credit or debit cards are more convenient,
especially when they’re out and about. However, giving out your hard earned cash is much harder
than simply swiping your card. It’s purely psychological. Credit cards make it too easy
to spend money. With one swipe, you can bring home the latest smartphone, or large flat screen TV.
Getting into debt is very easy, getting out of it is the hard part. Aside from paying more
over time, you’re also accumulating more debt if you don’t pay your bills off every month.
That’s why it’s so much better to pay with cash, and along with it comes certain benefits like;
it makes it easier to make a budget and stick to it. Thus
making, tracking how much you’re spending, no longer such a huge task.
Also by adopting the cash only envelope system, you’re forcing yourself to stick to the plan.
Just put the amount of cash for your weekly or monthly expenses in envelopes so when money
runs out, you know that spending is over. So, if you set up a certain amount of money that
you’re to use in a day for the essentials, you may end up coming home with some change to save.
2. Know why you’re overspending Knowing what’s the cause of your bad spending
habits, might be the first step towards breaking them. We tend to overspend for a number of reasons
one of them being, we don’t think ahead. We only think about the here and now, not having
a clue as to what tomorrow might look like. Sometimes you’re just an impulse buyer, or
you haven’t created a realistic budget. It’s hard resisting the allure of impulse purchases. We all
know the importance of making wise financial decisions, but sometimes we fall into the trap
of spending too much while still trying to form good financial habits. We are human after all.
Some people are used to spending money when they’re bored or tired, while others spend as a
way of reassuring themselves, and if this is you, try and find something to substitute spending.
Some people overspend by neglecting their savings, others waste money on
non-essentials instead of focusing on much more important things. But once you know why you’re
always overspending, you can break the habit. A lot of people overspend because they have no
clue whatsoever of how much cash leaves their wallet every day. They might have a rough idea
of how much it costs to buy groceries or clothes, but the figure is usually far from the real deal.
Identifying the source of your overspending can allow you to take action and prevent it,
like making a budget or cutting down on the time you spend shopping. It takes willpower to say no
to something you want right there and then. 3. Set goals for yourself
An awesome way to motivate yourself to save money and reduce spending would be to set a target
for yourself. Let’s say there’s something you’ve seen online or in a store that you’d like to buy.
Challenge yourself to wait until the next pay day before purchasing it.
You could set up an even bigger goal like saving for a vacation or buying a new car. Doing this
encourages you to quit spending frivolously, and maybe at the end of the month, you’re not
as interested in those new designer jeans as you’d thought, leaving you with more money in the bank.
Some people are lucky enough to be completely oblivious to their finances
because they have someone else handling them for them. But even if this is the case,
you could always make smart choices and take advantage of the situation,
especially if there are changes as in the case of a loss in the family, divorce or bankruptcy.
Short term goals help you change how you view money and how you use it.
Set short term financial goals that can be attained and help you curb your spending habits.
You will feel good about being independent, have your own money to save and even invest. An example
of a small financial goal is reducing the weekly expenses for when you go out. After that, you
can work on your long term goals like investing in the stock market or starting a new business.
The more you become money-savvy and less impulsive, you can begin
to think more about the future. 4. Get help from friends and family
It can be hard trying to tackle your bad spending habits and if you want to break free from them,
remember you don’t have to go at it alone. Why not talk to a few of the close people around you,
especially those who lack overspending tendencies and are strongly supportive and ask for help.
This could be your friends, family or spouse. Just be honest and tell them you have trouble
spending more money than you should, that you’ve identified it as a problem within yourself,
and it’s a hindrance to your goals and that you want to change. Let them know that you need help,
even though you don’t want to go into the details. At this point what you need from
them is their support. Who knows? Maybe they experienced the same thing at some point
and eventually found a way out. They may even act like the voice of reason whenever
you feel the urge to throw money around. You don’t have to figure this out on your own.
5. Set up a savings account Set up a savings account that you pay into
every month, if you don’t have one already. You’d need to think about how much would be realistic to
set aside each month. Ensure you don’t touch the money once you’ve deposited it into your account,
unless you need it for an emergency. This allows you to break your poor spending habit
since you’re going to be limiting the amount of money you’ve access to.
If you choose to put your money in a different bank other than your debit card
or open a savings account, it slows down the speed at which you can access your cash,
since you have to transfer it manually, then wait for it to be cleared.
This can help curb impulse buys, but you still have access to the money if you want it. If you
want, you can have your money transferred automatically into this account each month,
and this gives the money a chance to grow instead of relying on it to cover your overspending.
Attaining good spending habits doesn’t have to be hard.
All you need is a lot of confidence in yourself, that you truly can reduce
how much you spend. 6. Make a budget
It’s easy to shop till you drop when you’re not aware of how much you have and how much
you’re spending, only to be surprised later on by the high credit card bill. And at that point,
you stop to ask yourself what you needed all that stuff for in the first place.
The best way to get rid of bad spending habits is to make a budget and track your spending. It
forces you to make tough decisions in advance about what you can afford and what you can’t.
The process of creating a budget can be quite the eye opener. When you see that roughly half
your income goes to rent, you might want to consider cheaper living arrangements.
You might also be surprised how much goes to buying fast food or that spiced latte you like.
Maybe when you see the numbers clear as day, it might be easier to cut back than you thought.
It's not until you know where your money is going that you can really control your spending. Start
off by tracking your monthly expenses. Get your recent credit and debit card statements and
receipts and use them to categorise your expenses- groceries, housing, clothing, utilities, etc.
get the total and see how much you spent. If you have a budget already, compare it
to your monthly expenses to see where you’re spending more than expected. At the end of it
you’re more in tune with your finances and might even change the way you spend money.
7. Evaluate every purchase It’s already been established
that impulse buys and shopping without thinking are common habits that lead to overspending.
Before buying something new, delay the decision for a day and analyse the new item.
Do you really need to buy a new shirt or jacket? Is it possible
to borrow that tool you need from your neighbour or instead of having to buy it?
Can you get the same thing somewhere else for a cheaper price?
These are some of the questions you need to ask yourself before you decide to make a purchase.
Reducing the number of items you need, whether that’s an article of clothing,
electronic devices, tools or toys, will significantly decrease unnecessary expenses.
Also, make a habit of taking a shopping list with you when you’re out shopping and only buy what’s
on the list. This helps you stay on track and keeps you from making any unplanned purchases.
8. Plan your meals A good deal of money is spent on meals,
from eating out to groceries and for someone trying to make better financial decisions,
one smart money move would be to track your food expenses and look at areas where you can save.
Meal planning, for example, keeps grocery bills to a minimum.
If possible standardise a monthly menu of foods and recipes your family prefers, emphasising on
easy, made from scratch meals from inexpensive ingredients. So many benefits can be gotten from
this, like you tend to eat out less than you would normally do when you don’t feel like cooking.
You waste less since you already have a plan for all your purchases, and the ingredients you need
in bulk can be gotten from sales. You also don’t have to resort to overpriced prepared foods.
To break the monotony, you could always switch out ingredients or eat out once
in a while too. Planning meals not only helps you break your bad spending habits,
but you’ll be eating healthier as well. If anything, these strategies show that breaking
your bad spending habits is not impossible. With a bit of willpower, self-control and determination,
you can overcome it and turn your financial dreams into reality.
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