Five years back, I used to be this hopeless miser who would think at least twice before spending the least bit of money. I was more than satisfied having two pairs of shoes and a few dresses in my cupboard and hated spending money on stuff that I could do without. This obviously changed when I started working and had money flowing into my bank account. My spending habits changed overnight as I received my first paycheck making me want to own everything that I would see on display in the stores. It was a while before I realized how it was affecting my finances forcing me to hold back on mindless spending.
It can be tempting to spend money when you can see it sitting idle in your bank account but acting upon such temptations can be detrimental for your financial health. It’s easy to fall prey to sales offers and pretty dresses when you know that they are only a swipe away. But when these little mindless purchases bring in a long credit card statement at the end of the month, all you are left with is remorse accompanied by the need to reconsider your spending habits.
Overspending is known to be a big reason why many people find themselves broke at the end of the month despite earning a good amount of money. Overspending can be triggered by emotional, psychological or social factors but the solution to curbing this dangerous habit lies in changing the way you manage your money.
Are you that person who swears to save money but finds herself indulging in reckless spending as soon as the salary hits the bank account? Well, you are not alone here. Many of us are in the same boat and that is exactly what this post is meant to address.
Here are a few ways that can help you stop overspending while still living a rich and happy life:
1. Track Your Spending – Overspending gets aggravated by the tendency of not tracking where your money is going. Have you been spending a lot of money eating out lately? Are your utility bills turning out to be more that they should be? Do you visit malls/stores too often and buy things on impulse?
If you are serious about getting over the habit of overspending, you need to recognize the areas that you’re spending money on. In order to properly keep a tab on your spending, you can maintain a small diary that holds a record of all your expenses. Have a look at it at the end of the month and recognize the expenses that could have been avoided.
2. Decide Your Financial Priorities – Setting financial priorities has helped me a great deal in curbing the dangerous habit of overspending. Saving money for investments, going on a vacation and having a financial cushion are my three major priorities right now that I don’t want to lose my focus from. Every time I feel tempted to buy an unneeded item, I remind myself of how it can set me back on my financial goals which helps me make wiser decisions.
3. Switch To A Cash-Only Lifestyle – Try getting rid of plastic money for a month and you’ll be surprised how big a difference it can make to your budget. Credit cards and debit cards carry the value of convenience as they help you buy things in a simple swipe of a card. With plastic money, you neither have to count the amount of cash you are carrying nor do you have to part with it which makes it easier for you to indulge in overspending. Sticking to a cash-based budget can go a long way in helping you overcome the habit of overspending as you will gradually learn to spend only what you have.
4. Recognize Your Spending Triggers – Do you have a tendency to go on a shopping spree after a bad day at work? Do you buy things on impulse when you are feeling stressed or anxious? At the end of the day, we are emotional beings who find it easier to seek happiness from material things rather than dealing with the varied set of emotions that we experience every now and then. But as much as overspending helps you in granting a temporary relief, it can be a huge setback for your financial health. Therefore, it’s important to deal with your emotions in a way that doesn’t affect your finances negatively.
5. Don’t Give In To the Peer Pressure – If you are someone who easily gives in to the peer pressure only to find acceptance among friends and colleagues, there are huge number of chances that you are overspending a lot of your money on it. If spending money while hanging out with friends makes you feel secure of your position in the peer group, you may either need to rethink your financial goals or you need to stop feeling the peer pressure that forces you to overspend. The best way to beat the peer pressure is to voice it out to your friends when you are saving money or when you can’t afford to hang out with them at expensive places.
6. Create A Budget That Works For You – The most practical way to stop overspending is to make your budget work for you in the process. A budget can give you a reality check by helping you know how you are spending the money that you bring in every month. Budgeting also helps you assign a job to every dollar that you are earning so you don’t use it for other unimportant purposes. The 50/30/20 rule works for me when it comes to budgeting and it helps me keep a check on my spending habits.
7. Make Small Changes To Your Lifestyle – A lifestyle that prompts you to spend more than what you earn can pose a big threat to your financial wellbeing. Knowingly or unknowingly, you might have been spending money on things that you can do without – dining at five-star restaurants too often, buying expensive cell phone plans and other monthly subscriptions or hanging out with friends at expensive places.
While you don’t need to give up your lifestyle entirely, making a few good changes to it can go a long way in helping you curb overspending. Try inviting your friends over to dinner at your home rather than taking them out to places you can’t afford. Cut back on that expensive cell phone plan to buy a cheaper one and opt for some in-home entertainment rather than hanging out at pricey places.
8. Challenge And Reward Yourself – Challenging myself into saving a certain amount of money every month has helped me a lot in getting rid of the overspending triggers. Every time I step out to shop, I make it a point to resist the temptation of buying things that I usually tend to overspend on – footwear, dresses and perfumes. And for every successful challenge, I reward myself with 10 or 20 percent of the money saved which can be used to buy anything that I want.
While overspending is too addictive a habit to overcome, it takes time and efforts to truly be able to find yourself on the other side of it. You don’t have to beat yourself up for being an over-spender as many of us are in the same boat. All you have to do is to use your money in the wisest way possible without having to compromise too much on your lifestyle.