How to Curb Overspending
Although many people start each year off with the right intentions, often they find themselves overspending.
An inevitable situation, it’s something that happens despite their best efforts to prevent it from happening.
If you’re finding yourself in this type of situation, overspending when you should really be saving, then it’s vital that you find a solution.
There are many reasons why you overspend.
From mindless purchases that you consider to be justified to the more spontaneous investments, these spending habits might seem harless to start with, but could wreak havoc in the long run.
But you might be wondering, what are the signs of overspending?
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Understanding these is a vital step towards knowing the ways in which you prevent it from happening.
Here are four of them:
- You Have No Money Left Over Each Month The first sign is that you have no money left over each month as your credit cards are maxed out. If this is happening, it’s a clear indication that you’re living a lifestyle that simply isn’t sustainable. Fueling your overspending by using the resource to your advantage, you’re making each month that bit more difficult.
- Your Credit Card Bill is Higher Than Your Monthly Income If you’re constantly finding that your credit card bill is exceeding the amount that you’re getting in each month, you’re spending too much. For example, if your income is $3000 each month but your credit card bills are topping the $3500 or so mark, you’re in a dangerous financial situation.
Your Not Sticking To Your ‘Budget’
Even if you have a budget in place, it might not be working as effectively as it should. If you’ve not strictly followed it, then you could splurge on expenses that drastically affect your bank account. For example, you might have budgeted $100 a month for takeout, but in reality you’ve spent closer to the $250 mark.
You Visibly Have More Items Than The Worth of Your Bank Account
Take a look around your room. Do you have items in there that you spontaneously or impulsively bought? Because of these decisions, your bank account has taken a hit.
So how do you fix your overspending?
To ensure that this doesn’t happen and you don’t run the risk of having to file for bankruptcy, here are seven top tops that you can use to help take control of your finances:
Create a Monthly Budget (And Try to Stick To It)
Many people effectively track the bigger expenses.
However, they don’t realize just how important it is to also look at the smaller ones.
The simplest spends can make a huge dent in your finances – without you even noticing.
So it’s a good idea to take a long hard look at what you spend every month and track all of your outgoings.
A major wake-up call, it will show you where and how your purchases are adding up.
Preventing you from ramping up your expenses, you’ll be in a better financial position.
But how do you create a monthly budget?
Well it’s a good idea to make a list that details every expense each month, along with your monthly income.
Information that you can get from gathering all of your bills (including your credit card, mortgage bills and utility bills) and listing all of your variable spending, you can see a detailed depiction of exactly what you’re spending.
Once you’ve created this list, you can then allocate a portion of your money into your savings.
By doing this, you’ll have a little extra money in case you ever need it.
When this is done, you’ll then have a budget that you can stick to each month.
Although, of course, each month is different and it can bring different expenses, by knowing how much you can spend and things that you can cut down on, you’ll be in a favorable situation.
With your new budget, you can test it out and see how well it’s working.
Tracking how much you’ve been spending while looking at your budget, it will make the process a lot simpler for you in the long run.
Put Away The Credit Cards
When you’re shopping either online or in store, it’s convenient to pick up your credit card and put the payment onto it.
And when you know the number without having to look at it, this process is made even easier.
However, if you’re trying to curb your overspending, then one of the first steps you can take is to put away your credit cards.
Unless you have plans to pay it off, then you should instead opt for cash.
This will take away the temptation of relying on your credit card when buying something that you normally wouldn’t – decreasing the chance of you getting into debt.
By doing this and trying to forget your credit card number it will make you think twice before buying things that you don’t necessarily need.
Another step that you could take when doing this is to remove any of the saved credit card information that’s online.
This way, it will make it nearly impossible to make such purchases and will prevent you from easily buying anything with a simple click of the mouse.
Devise Short Term Financial Goals
If you’re lacking in the motivation that’s needed to alter your spending habits, then it’s worth devising realistic and attainable short term goals that you know you can aim for.
A constant reminder as to why you’re cutting back, it will give you the determination to follow your monthly budget through.
By doing this, you’ll then start to recognize that these small sacrifices are more than worth it.
These financial goals will need to be specific – not general.
For example, you could do the following:
- Put 10% of your paycheque each month into a savings account;
- Save $500 and put it into a bank account specifically for emergencies;
- Cancel any subscriptions and other unnecessary expenses.
By being more specific, you’ll have a clearer target to aim for.
Shifting your view on money, it will make you appreciate it more and realize why it’s important to save, rather than overspend.
Whether this is one of the above short term goals or something similar, it’s important that you keep them straightforward, so that you can remember them and are not tempted to break them.
Opt For Cash Over Credit Cards
Another clever trick that you could use to help curb your spending is to opt for cash over credit cards.
By switching to this, you’ll be forcing yourself to budget more carefully as you’ll clearly see exactly how much you’re spending – rather than when you put everything on a credit card and don’t bother keeping track of your spending.
It’s easy to pay for something on a credit card rather than in cash – that’s just a fact.
But this ease and convenience is one of the key factors behind why so many people overspend in the first place.
To do this effectively, once you’ve created a monthly budget, you could use a series of envelopes, each labelled according to how much money you want to spend on a certain thing.
Of course, these should really only be the necessary expenses, such as your monthly utility bills, living wages, etc.
By doing this, you won’t be tempted to spend more than what you’ve put aside and you’ll be able to stretch the cash if need be.
This type of method of paying will help you to stop relying so heavily on credit cards and will help to prevent you from getting into debt.
Stopping you to spend the money that you don’t actually have, it will also make you more resourceful.
A clever technique that’s ideal to use no matter what your age or lifestyle, you’ll see the benefit of doing this in no time at all.
Try To Zero Out Your Accounts
As an overspender, you might have the mindset that if you have the money within your accounts that you can spend it.
That’s why it’s a good idea to try and zero out your accounts each month.
This isn’t meant in the sense that you spend all that’s in your account – but that you find a smart use for each dollar within your account, so that you aren’t making thoughtless purchases.
By allocating each and every dollar, you’ll be able to make better spending decisions.
Seperated into specific categories, you won’t be tempted to blow any money on other things.
For example, if you see $1000 in your account, make sure that each of the dollars are put towards necessary expenses and that you’re not spending it on several indulgences each month.
Even though you might want to go out and treat yourself with this $1000, at the end of the month you’ll soon realize that you don’t have enough to cover your living wages – an issue that no one wants to face, but many do due to lifestyle or social pressures.
To avoid this from happening, the moment that you deposit your paycheck into your bank account, start to ‘tell it’ where it should go.
The first place you should put it is towards your bills.
Then, to prevent you from being tempted to spend the rest, move it to your savings account or the IRA account you set up.
By giving each dollar a home, it will leave a $0 balance within your account.
If you don’t think that you’ll do this naturally, you could proactively make the decision to set up an automatic transfer.
This will take the pressure off of you to remember to do it and will make the process more straightforward.
Increasing your financial awareness, it goes a long way in creating a positive relationship between you and money.
Reward Yourself Every Now and Again
Although it’s essential that you don’t overspend and that you budget effectively, that doesn’t mean that you shouldn’t reward yourself every now and again.
However, when doing this, make sure that you’re not simply going back to your old ways of spending more than you can afford.
Giving yourself little rewards that you’ve budgeted for every now and again will help you to keep on track.
A financial version of a cheat meal, it will make you appreciate what you’re spending, without you feeling as though you’re so restricted that you can’t spend your hard-earned money on something you want ever so often.
Of course, it takes time and effort to stop spending money altogether. So you need to start by reforming your spending habits and easing the spending.
Don’t be too hard on yourself – not everyone will curb their habits completely from the get-go.
But by being sensible with your money and using the right tips and tricks, in time you’ll start to become a more frugal and wise consumer who knows what to do with their money.
By taking a contextual approach, it will make you see your overspending in a different light.
For example, when you’re faced with a purchase, instead of taking the leap and buying it straight away, try and compare it to other, more necessary items that you could buy with the same amount of money.
By doing this, it will put your potential impulse buy in context and make you think twice about it.
For example, if you’re looking to spend $3000 on a spontaneous vacation, think about how many hours it would take to earn that money or what else you could do with it – such as putting it into savings for the future or buying an item you’re more likely to need like a car.
This helps you to understand the value of the money and deter you away from overspending in the first place.
So, there you go!
Those are 7 clever tips and tricks that you could use to help curb your overspending.
What you do, of course is up to you and will depend on several factors – including how willing you are to cut back and the amount of money that you want to save each month.
However, whatever step you take to try and curb your spending, you’ll be in an improved financial situation that will not only benefit you in the present, but also in the future.
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