Most people aren’t the best at managing their money and many struggle to save on a consistent basis. There can be many reasons behind why you may be spending more than you need to and I can help you identify those reasons to get towards the path of spending consciously and mindfully. So if you’re someone who has difficulty budgeting and managing money and feel like you’re living paycheck to paycheck, here are some tips on how to stop overspending so you can focus on working on getting some savings.
1. Add Context To Your Purchases
My number one tip on how to stop overspending would be to add context to your purchases. What I mean by that is whenever you want to purchase an item, look at the price of that item and judge how much is required from you to purchase that item. For example, if you want to buy a pair of $40 jeans, and you currently make $15 an hour, then you know that the worth of those jeans is equivalent to you working 2.5 hours. Once you start doing this with all of your purchases, I can guarantee that you will think twice before making certain purchases and become a more mindful shopper.
2. Track Your Spending
You will have no idea if you’re even overspending if you’re not tracking your spending. Once you have a clear idea of how much you’re spending per month and on what, it can be a lot easier to cut down on expenses.
I recommend trying out Mint.com for doing your budgeting. It’s a free tool that can not only help you see where your money is going but can also help you budget and tell you if you overspend based on your monthly budgeting goals.
3. Always Shop With a List
Another great tip on how to stop overspending is to always, always, always shop with a list and plan on sticking to it. Following this practice can help to ensure that you don’t end up getting extra items that you don’t need and are only getting what you planned to get. This can be a great way to curb impulsive buying, which typically results in you overspending.
4. Stick to Cash
It’s really convenient to whip out a credit card and pay for your purchases than it is to pull out a wad of cash and pay. As a result, relying heavily on credit cards can lead to overspending as it’s harder to put a limit on how much you can spend. If you stick to only using cash, you’ll have an exact idea of how much money you have at your disposal and the amount that you can spend.
With cash, once you run out that’s the end of the story and it makes it less likely that you will overspend, as you do not have any more money once you use it up. So the next time you’re heading out for a shopping trip, it would be wise to take a cash amount and stick to using only that.
5. Look at What You Already Have
Oftentimes, the habit of overspending comes from the fact that we do not take the time to realize what we already own and have, and are always desiring more. If you take some time to reflect on all the things you have you will find that there is probably not much that you need. Making yourself aware of this fact routinely can ground you to reality, make you greatly for all the things you do have and not lead you down the path of buying extra things just because you want to.
6. Live Within Your Means
Living within your means, means that you must be self-aware and self-disciplined when it comes to spending. When making purchases, you need to ask yourself how this will affect your finances in the long run. For example, if you want to spend $1000 on a new phone would it be worth it if it meant that you wouldn’t have enough money left over to eat out for the month? Decide for yourself what matters most to you and don’t get caught up in trends or pressured to buy items you cannot afford.
7. Set Financial Goals
My last tip on how to stop overspending is to set some financial goals for yourself. This will help to remind you of the reasons why you’re cutting back on expenses and will keep you motivated to keep doing it. Remember to set goals that are actually attainable so you’re not setting yourself up for failure. Start by making small goals such as reducing how much you spend on buying clothes from $200 a month to $100 a month.