Do you know how to spot the warning signs of an overspending habit? If any of these scenarios sound familiar, you might be spending more than you can afford:
- Do you find yourself accumulating a bigger balance on your credit card every month?
- Are your closets, drawers and cabinets overflowing because you keep buying things you don’t need?
- Do you take a nervous look at your bank account balance a few days before each paycheck and wonder where all the money went?
- Is it common for you to go to the store for one item and find yourself coming home with ten?
If left unchecked, overspending can hurt you financially and hold you back from reaching your long-term goals. But there is good news: you don’t have to resign yourself to chronic overspending. With some simple steps, you can find the confidence to get your spending under control and develop better financial habits.
If you think you have an overspending habit, here are seven ways to break out of it:
- Get on the same page with your significant other. If you’re married and manage your money together, your individual efforts may not impact your joint finances if your spouse just spends the money instead. Sit down together to talk about your spending patterns and resolve to work together to cure any bad habits you discover.
- Track your spending, so you know how bad your habits are. It’s hard to solve a problem if you can’t recognize it first. If you suspect you've been overspending, keep a log of everything you buy. Liberty Bank’s free Money Manager tool can help you do it all online. You may be shocked to learn how much you are spending on clothes, coffee, fast food, electronic gadgets, gifts, or other items that fuel your habitual overspending.
- Decide what you would rather be spending on. It helps to focus on a tangible financial goal when you have the urge to spend money on other things. Maybe you want to pay off a credit card, build an emergency fund, save for retirement, buy a house, or take a dream vacation. Once you set your sights on a specific goal, it’s easier to cure your overspending habit because every dollar spent is a dollar less for your goal. A good way to remind yourself of your goal: write it down on paper and keep it in your wallet so you’ll see it each time you buy something.
- Budget how much you will spend in each category. It’s often difficult to go cold turkey and stop spending entirely. Plus, some amount of spending can be appropriate for your lifestyle and helpful for your mood and well-being. Decide how much you would like to spend by category, for instance groceries, clothing, or dining out. You can budget these amounts per month or pay period, depending on what makes more sense to you.
- Use cash so you can't overspend. Swiping a card is far too easy. And you might spend more than you intended without even realizing it. Once you have a budgeted spending allowance, withdraw this money in cash and put it in an envelope. When the cash runs out, don't spend any more on that type of purchase until you get your next allowance at the beginning of the month or after your next paycheck comes in.
- Check in regularly to track your progress. Even if you think you have a foolproof budget, you may find ways to cheat, like saving up your spare change and using it to fuel your spending addiction. Every few months, spend a week tracking your actual spending of every penny to make sure you’re not letting bad habits go unnoticed.
- Compete with a friend for support and accountability. It’s always helpful to have someone you can talk to about your spending habits and goals. A friend who’s in the same boat as you can be the perfect person. Compare notes on a regular basis to see how you are doing, and maybe even set up a friendly competition to see who can cut their spending more. Plus, when you have a friend who is trying to cut spending too, you can find inexpensive ways to hang out together, helping each of you achieve your goals.
Looking for an easy way to track your spending and budgeting? Try Money Manager, our powerful, free tool that gives you a complete picture of your finances.