4 Ways to Stop Overspending
More often than not, overspending is the result of impulse buying. This can, and usually does, lead to an increase in credit card debt. It’s a bad habit that can be hard to break, but it can be done, if you set your mind to it. To stop overspending, you must make a few changes in your lifestyle.
A part of the problem is the incessant advertising we see on television and even when browsing the internet. The temptation to buy a product that you don’t need can be hard to resist. This is especially true when the advertiser says no interest for a long period of time, and a low monthly payment.
There are a number of ways to stop overspending, but we’ll list just four (4) that we feel are the most important.
Make a budget that is realistic
Before you actually make a budget, it’s important that you track your spending for the first month. You need to see just where your money is going so that you can make necessary adjustments. Usually, you aren’t aware that overspending exists in certain areas.
Remember, when you make a budget, it’s not just for the short term. The idea, is to set long term goals, such as setting up an emergency fund and providing for retirement. If you give every dollar a specific job, and stick with it, you’ll soon begin to stop overspending.
Most individuals find that using a budgeting app makes the job of creating a budget a lot easier. Some apps will actually lead you through the entire process, making suggestions along the way.
Many individuals think that using a budget is too restrictive and won’t let you spend any money for entertainment and things like that. As a matter of fact, we recommend that a reasonable amount of money be budgeted for non-essential items.
Setup a 24-hour rule for purchases
This rule is very important, especially on impulse purchases. If it also means that you will be charging the purchase on a credit card, we recommend adding another day to the rule.
Some individuals use the cost of the purchase to determine the waiting period. The higher the cost, the longer you will need to wait. If the purchase has to be charged, waiting longer will give you more time to consider if you really need it.
Use cash – no credit cards
Most impulse buying can be attributed to credit cards. Your favorite stores send you e-mails trying to convince you that this new gadget or product is exactly what you’ve been waiting for. All you need to do is “click here” and it will be delivered in a few days.
Or you may be out shopping in the mall for your new eyeglasses that you must have. You walk by a lot of other stores with attractive displays trying to entice you to come inside. If you leave your credit card at home, chances are you won’t be entering those stores.
How about those days you come home from work and are too tired to prepare a meal? You go online to your favorite restaurant, order a meal for delivery, and that cost isn’t cheap. If you weren’t using a credit card, maybe you would have stopped at a fast-food drive through for an inexpensive burger. Or better yet, maybe you would have checked your fridge for leftovers you could have heated up.
Allow yourself some fun spending
Making a budget that you can live by is similar to creating a diet plan to lose weight. If the diet is too strict, you’ll eventually start to binge on certain foods that you want to avoid.
Budgeting is not much different. If you create a budget that is too strict and doesn’t provide for a little fun spending, it won’t be long before the temptation to splurge on some unnecessary item becomes too great.
You can avoid this unwanted outcome by setting up a reasonable amount of money that you won’t feel guilty in spending. You need to allow yourself some small extravagances that won’t affect the overall goals you’ve set.
If you plan for this when you make a budget, the chances are good you’ll stick to it longer and will be able to stop overspending.