10 Painless Ways to Fix Your Overspending Habits

They say money can’t buy happiness but it is an undeniable fact that we need cash to survive. We spend on things we need from food to bills. Of course, that is part of “adulating”. But here’s the kicker: Most adults think that they are also entitled to reward themselves after the hard work of earning cash. This is why shopping can give happiness and fulfillment at times. And there is nothing wrong with that as long as you can control your spending habit.  However, many of us unknowingly turn into overspenders.

Overspending can impact your future finances if left uncontrolled but it does not mean that you have no way around it. Here are 10 proven ways to help you curb overspending.

Track Your Cashflow

Fitz Villafuerte: “Cashflow is, and will always be, the foundation of all financial plans.” To curb your overspending, you need to know how much you are earning and spending every month. You need to consistently track your spending for three consecutive months. This way you will be able to categorize your expenses into four types:

  • Fixed expenses (expenses that do not change such as your house rent),
  • Fluctuating expenses (bills that depend on your consumption such as water and electricity bills),
  • Avoidable expenses (expenses that depend on your choice such as eating in fast food instead of bringing homemade lunch), and
  • Frivolous expenses (expensive items and services you seldom use)

Identify Your Spending Triggers

Lori McRitchie: “In order to reach your goals, you first need to figure out what your spending trigger is.” The common spending triggers can be depression, keeping up with the Joneses, boredom, advertisements, and emotions. Start a journal. Write why it triggers your spending. Why do you feel the need to spend money to make you feel better? Where do you spend money the most?  To avoid the shopping triggers you must avoid going to stores if you do not have a very specific reason to. Shop alone if you can, this way there will be no need to feel obliged to eat out with friends. Get rid of your Prime membership if your trigger is online shopping. And find new forms of entertainment.

Creating a Spending Plan

Dr. Bradley Klontz: “Your emotional brain responds to the word ‘budget’ the same way it responds to the word ‘diet’.” For our brains, diet means derivation and suffering – the same goes for the word budget. This is why you have to make a spending plan rather than a traditional budget. A spending plan is a more detailed approach when planning your expenses. With a spending plan, you need to make a table specifying each expense, how much, and your goal. Let’s say you have to pay a loan for the next 6 months. You have to write your monthly dues and how much is an outstanding balance. If you want to save up for a vacation, you need to plan how much you want to save each month, how much is your goal, and where you are going.

Give Every Dollar a Job

Dave Ramsey: “People who do a zero-based budget (versus those who don’t) pay off 19% more debt and save 18% more money!” How did that happen? The point of a zero-based budget is planning where your every dollar goes to prevent overspending. After making a spending plan, you might realize that there is some extra cash left. It does not matter if it is $5 or $500. You may put it in your savings, investment or vacation plan, just don’t leave it hanging for you to grab when you get the shopping impulse. Whether it be settling your existing debt or beefing up your savings, make every dollar work to your advantage.

Pay Yourself First

J.D. Roth: “To pay yourself first means simply this: Before you pay your bills, before you buy groceries before you do anything else, set aside a portion of your income to save.” With that being said, paying yourself first is simply prioritizing your savings above all else. Building your personal savings is a powerful motivator since you are establishing a safety net for your future finances. Having an emergency fund is empowering. It can bring peace of mind and sense of security.

Use Hard Cold Cash

Manoj Thomas: “The pain of paying in cash can curb impulsive urges… Credit card payments, in contrast, are relatively painless and weaken impulse control.”  While there is nothing wrong with using a credit card for necessary high ticket expenses, depending solely on credit card is a dangerous habit since you are not seeing actual cash slipping away from your hands. It is recommended to use no more than 30% of your credit limit to help keep your credit score healthy. When you go shopping for your regular groceries, bring just enough cash in your wallet. Leave your credit card at home.

Create a Sinking Fund

Miriam Caldwell: “…with a sinking fund, you are saving up for your planned expense… like buy a new car, go on vacation or put a down payment on a home.” A sinking fund is a sum of money you have set aside apart from your savings and emergency fund. Simply, it is your savings for your planned expenses such as going on a vacation, buying a car, or purchasing a home. It is your additional safety net that keeps you from overspending and using your personal savings.

Ask Your Loved OnesTo Check Your Progress

Thomas S. Monson: “When performance is measured, performance improves. When performance is measured and reported, the rate of improvement accelerates.” Motivations from the people around you are empowering. Financial struggles can be depressing. Not to mention that trying to control your shopping urges can be a challenge right from the start until you develop positive spending habits. This is why you need to be motivated.  However, it is not enough to just tell them about your intention to be financially responsible. They have to check your progress and encourage you to be constantly accountable.

Get Professional Help

Kelly Trageser: “Recognizing you may need professional money help is the first step in the right direction toward better financial health.” The very first step to controlling your overspending is acknowledging that you need to change your spending habit. However, restructuring your finances into a better shape can be overwhelming – from tracking your every cent to paying off your credit card debts. A financial planner can help you get back to the track and avoid relapse.

Monitor and Celebrate Your Progress

Greg Johnson: “Rewarding yourself keeps you motivated toward accomplishing your budgetary goals while helping to fill that deep craving to enjoy your money.” Total deprivation from your favorite things can backfire much like in dieting. The more you deprive yourself of your beloved shopping spree, the more chance you are going to binge on spending soon. That’s why you need to reward yourself every time you reach a milestone. Give yourself little cost-effective rewards on a set timeframe. With this being said, make sure to set short-term financial goals. This way it will not crack down your finances that you have been trying to set on the right track.

Final Thoughts

Overspending habits are not something that you can fix overnight. It is a daily work in progress which can be made bearable with the help of your loved ones.  Involve them with your financial plans especially if you are not confident with your own self-control. It will surely lighten up the load mentally and financially.