6 Tips To Control Your Finances And Stop Overspending

Are you a self-confessed overspender?

In spite of your best intentions and resolutions, do you empty your bank account every month due to mindless purchases? A ‘little won’t hurt’ attitude can be dangerous and may exhaust your entire paycheck at the end of the month. Once you realize you’ve chipped away whatever savings you had, you’re left scrambling for money. Overspending is a very bad financial habit since it can push you towards credit card debts. In fact, this is the main reason behind the ever-increasing debt problems in the country.

Why do people overspend usually?

Overspending is more of an emotional problem instead of a financial issue. For instance, some people shop more when they are depressed. Other instances are like this:

• Some people overspend just because they couldn’t afford to buy anything in their childhood

• Some people end up overspending after a lifestyle inflation

• Some people overspend since they love to show off

How do you know you’re overspending?

You should know the signs of overspending habits for your own financial benefit. If you don’t know the signs and take steps to control your bad spending habit, then you’ll be in a big financial problem later.

Here are a few signs of overspending habits you shouldn’t ignore:

1. You go shopping even when it is not required.

2. You splurge on entertainment but overlook fixed expenses.

3. You shop as per your whims and fancies. There is no fixed budget for it.

4. Your lifestyle-based expenses increase with your income.

5. You have crossed the credit limit on your credit cards.

6. You make only the minimum payments on your credit cards.

7. You are planning to take advantage of debt relief programs to pay off your credit cards

6 Tips and tricks to stop overspending

(1) Accept the fact: Accept you’re an overspender for taking control of your money. Nobody’s perfect. You have a problem. You have to take some concrete measures for improving your financial habit.

(2) Work on your current budget: Obviously, your current budget is not working. Otherwise, you wouldn’t be an overspender. Calculate how much you’re bringing every month. Next, figure out how much you’ve allocated to various categories. Now, find out how much you’re spending on each category.

Try to allocate funds to each category based on the amount you have spent in the past. But do reign things in a bit. Don’t be too strict or too carefree. Try to follow the 50/30/20 rule while creating the budget.

• Allocate 50% of your income towards your necessary expenses

• Allocate 30%  of your income towards your lifestyle expenses

• Allocate 20%  of your income for saving money and paying bills

(3) Remove your saved details: Have you saved your credit card and debit card details in online shopping portals? If so, then remove them as soon as possible.

When you’re an overspender and you have your credit card details saved in online shopping portals, it becomes too easy to shop and spend more. You can avoid this hassle and the temptation to buy anything with a single click by removing the numbers.

If you have memorized all the numbers by heart, then cancel your current credit cards and request new ones.

(4) Pay with cash: Switch to cash since it helps you stick to your budget. If you’re going shopping, carry the amount you’ve set aside for it in an envelope. For instance, if you have allocated $100 for shopping in a month, then carry only this amount in your wallet. When your money runs out, you can’t shop more.

(5) Find out cheap fun activities: Many times overspenders refuse to change their lifestyle since they think it means they can’t enjoy themselves with their friends. But this is a myth.

Obviously, you can’t enjoy a lavish party on a cruise or eat at 5-star restaurants anymore. But you can still be a social animal and mingle with your friends in the following ways:

1. Organize a potluck party instead of having a pricey dinner at a 5-star restaurant

2. Have a picnic in a nearby park

3. Organize a board game tournament at your home

4. Organize a video game tournament at your home

5. Go fishing or camping

6. Swap movies, music and, books

Don’t hesitate or feel awkward to inform that you want to spend less. Rather, you should discuss your bad spending habit with your friends. Maybe, they can give you some interesting suggestions to get rid of this bad habit.

(6) Set attainable financial goals: Overspenders are mostly concerned about instant gratification. They don’t think how their habits would affect them in the long run. One way to leave this habit is to write down your short-term financial goals on a piece of paper. Paste the paper in a prominent place so you can look at it every day. It will help you remember why you’re reducing your expenses and sacrificing so many things.

Examples of short-term financial goals

• Save a minimum of 10% of your paycheck in a month

• Use a cash-only budget for 14 days

• Carry a brown bag to an office every day

• Save $1000 in an emergency fund

Conclusion

You can’t reform bad financial habits overnight. It will take time to get rid of those habits. Acknowledge your flaw, make a commitment, and watch out for the ways to stop spending beyond your financial means. Set goals and take proactive steps to turn from a chronic overspender to a smart consumer.