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Excessive spending is a self-destructive cycle most of us have been caught up in at some point. Despite your best intentions, you can’t seem to stop impulse purchases or get your finances on track.
We get it. No one likes being told no—especially when we have to say it to ourselves.
But children do what feels good. Adults devise a plan and follow it. If you’re tired of your finances getting out of hand, get your spending under control with our step-by-step plan.
The Excessive Spending Cycle
People spend money for many reasons, and some of those reasons can be rooted in emotion. A lot of times, we can chalk up overspending to three simple things:
1. Trying to keep up with the Joneses.
You may have heard this before, but we’ll say it again: You don’t have to keep up with the Joneses! The comparison game is nothing new. While that big house and fancy car may look nice on the outside, the debt and stress that come along with them just aren’t worth it.
2. Having a bad (or nonexistent) budget.
It doesn’t matter how large or small your income is—if you don’t have a budget, you’ll likely spend it all and wonder where it went. A budget allows you to take care of your bills and still have room for fun without the guilt or debt.
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3. Shopping to feel better.
Some people like to joke about being a shopaholic, but compulsive spending through retail therapy is a real thing. For most of us, spending on an impulse just because we want it now is the problem. We see something and buy it before we think about the financial fallout.
The good news is, you can overcome these overspending habits with a little planning, self-discipline and long-term thinking. Here’s how we suggest you stop your excessive spending:
Swear Off Debt
If you’re serious about getting your overspending under control, you have to swear off debt for good. After all, debt is what happens when we spend money we don’t have.
We live in a world where just about anything can be financed, which can give a false sense of financial security. It makes you think if you can afford the payment, you can afford the new car, house, or big purchase. In reality, if you don’t have the cash to pay for something, you can’t afford it.
Make the decision to cancel your credit cards and commit to living without debt. Credit only enables you to overspend. Without it, overspending is no longer an option.
Know What You’re Spending Money On
Now you need to figure out where your money is going. Track your spending for a month and look for trends. You might be surprised by how much money you’re letting go in a month or week on little things like coffee and lunch out.
Make a note of your necessary expenses and make them your top priority. We call these the Four Walls:
- Shelter and Utilities
- Basic Clothing
While these are the necessities, they can also offer an opportunity to cut back. You don’t need to go out to dinner every night or buy new clothes every week.
Look through your monthly expenses for ways to trim your spending. Do you need that fancy satellite dish when there are easy, cost-effective alternatives to cut your cable bill? What about that $50 gym membership you haven’t used in eight months? Answering questions like these can help put you on the path to spending your money intentionally.
Spend Your Money With Purpose
Alright, so you’ve read this far. Congratulations! You’re taking the first steps toward creating a monthly budget. Now you’re ready to create a spending plan for everything from gas to going out to eat for the month.
If you want new clothes or concert tickets, that’s great! Just make sure you work them into your budget categories after you prioritize your Four Walls. Once you’ve spent every dollar on paper, use the envelope system to stay on track.
Just withdraw the cash you need based on your budget and sort it into labeled envelopes. For example, if you’ve budgeted $400 a month for groceries, set aside $200 when you receive your first paycheck and put it in the groceries envelope. Add the remaining $200 when you receive your second paycheck.
If you have a job that makes your cash-flow unpredictable, don’t worry! You can still create a budget for an irregular income.
Use a free budgeting app like EveryDollar and create your first budget in 10 minutes. You’ll be able to plan your budget, track your spending, and monitor your debt and savings progress.
Shop With a Goal In Mind
We’ve all been there. You’re at Target and all you need is shampoo and toothpaste. But as soon as you walk through the door, you feel the gravitational pull of the dollar section and fill your basket with a bunch of golden thumbtacks and glitter napkins you swear you’ll use at some point in the next five years.
A quick trip to the store for a few essentials can get expensive thanks to a few seemingly harmless impulse purchases.
No one really plans on getting sidetracked while they’re out shopping for essentials. But if you find you have a tendency to impulse shop, make a plan to avoid stores that trigger excessive spending.
Shop with a plan.
Stop Spending Money On Going Out to Eat
Changing the way you spend money on food is one of the easiest ways to stop overspending. Dining out gets expensive fast. If you’re spending $15 on lunch four times a week, that’s $60 a week—and $240 a month!
Consider this: Instead of heading into the grocery store and wandering up and down the aisles, create your meal plan for the week, make a list before you go, and stick to it. By planning out meals in advance, you can lower your overall food costs by reducing the amount of food you buy—and waste.
Lunchtime also offers a great opportunity for you to cut back. Bring your lunch to work every day. It doesn’t have to be complicated! Just prep meals on Sundays or take 15 minutes each night to make a sandwich or pack up some leftovers.
We’re not saying you shouldn’t ever treat yourself to a nice dinner on a special occasion or Sunday brunch—you just have to make sure it’s already in the budget.
Who doesn’t love a good deal? Retailers know their customers, and they also know the irresistible pull of a flashy sales rack. But how much is all this "saving" really costing you?
If you buy a sweater you never intended to buy just because it’s 25% off, you’re paying 75% more than you would have. That’s called spending, not saving.
Avoid these shopping traps by—say it with us—making a list before you go! Then practice some self-discipline once you’re there. If you see an item on sale that isn’t on your list, don’t get it.
If you’re having trouble sticking to your new budget and shopping list, imagine how you’ll be using that "must-have" item a month from now.
Will that sweater still look good after a few washes? Will your kids still be playing with that pricey toy set? Will those cheap shoes start rubbing blisters on your feet?
The majority of the time, the answer will be to put it back. But what if you still want it? Then you wait. Work it into next month’s budget and revisit your feelings in 30 days. If you still love it, you’ll be able to buy it without the guilt because it’s already in the budget.
Challenge Yourself to Reach Your New Goals
Put your willpower to the test by buying just the bare necessities for one month. You’ll be amazed by how little you actually need.
You’ll also be able to identify the things you don’t necessarily need, but simply like to have. Do you like using your gym membership because it helps you stay active? Keep it. Does your weekly visit to the chiropractor keep your back in tip-top shape? Keep going. If you can fit it into your budget, you can spend money on it.
Remember: A budget isn’t a bad thing. When done right, a budget actually helps curb excessive spending by giving you permission to buy what you want. Once you know why you overspend and what you overspend on, you’re better equipped to resist temptation while on your next shopping trip.
The key to stop your excessive spending is creating better money habits. Don’t step into a store again without a budget! Our FREE budgeting app EveryDollar makes it super easy to create your first budget. Get it now!