Three Signs You’re Overspending

Three Signs You’re Overspending

Three Indications of Excessive Spending and the Techniques to Curb It

Financial instability is often the result of excess spending, a problem that is frequently ignored until it becomes severe. However, identifying the issue and implementing certain strategies can help curb this problem for good. This article delves into the “Three signs you’re overspending — and how to stop it for good.”

Living From One Salary to the Next

If you find yourself postponing regular purchases or delaying bill payments until your next paycheque, it might be an indication of overspending. If this trend is increasing and your bank balance is dwindling between paycheques, it’s high time to review your spending habits.

Strategy for Improvement: Establish a Budget and Adhere to It

A budget is a powerful tool that can help plan, track, and optimize spending. Even though it doesn’t increase your income, it can help you maximize the use of your current earnings. Here’s how:

 

Overview– A budget gives a comprehensive view of your financial situation, making it clear whether you’re living within your means and what steps you can take to improve your financial health.

Identify hurdles– A budget helps pinpoint expenses and spending habits that are causing financial strain. This can guide you on where to cut back on discretionary spending or negotiate for lower fixed expenses.

Track progress– A budget compels you to monitor your spending and progress over time, thereby helping you to identify and address your weak points.

 

If you’re new to budgeting, check out this detailed guide on budgeting here and a free budgeting template here.

Struggling to Save Regularly

If saving at least 10% of your income is a constant struggle, it’s a sign that your spending priorities need realignment. Consistent difficulties in saving could be a prelude to more serious financial problems.

Strategy for Improvement: Automate Your Savings and Make It (slightly) Difficult to Access

Treat savings like any other recurring expense. Pay yourself first before meeting other financial obligations. Here are a couple of methods to automate your savings:

 

Online banking– Most financial institutions offer automatic transfers. Use this feature to transfer a specific sum from your checking account to your savings account every month or after every payday.

Split your paycheque– If your salary is directly deposited into your account, your employer might be able to divide your income between two different accounts.

 

For added security, consider opening a savings account with a different bank and ensure there’s no debit card linked to it. This makes your savings less accessible and discourages impulsive spending.

Rising Credit Card Balances

Credit cards, if not handled properly, can lead to financial ruin. Their high-interest rates can turn small balances into unmanageable debts. If you’re consistently charging more on your credit card than you can pay off each month, it’s a sign of potential financial trouble.

Strategy for Improvement: Set Rules for Credit Card Use

Credit cards can be convenient, earn you rewards, and help build a positive credit history. But misuse can lead to financial pitfalls. Here are some guidelines to help prevent credit card debt:

 

  • Keep your credit card limit below your net monthly income
  • Pay off your credit card balance after every purchase.
  • Use your credit card only for necessary purchases.
  • Leave your credit card at home unless you have a specific plan to use it.
  • Never use your credit card for unplanned or non-budgeted purchases.
  • Never exceed 30 percent of your total credit card limit.
  • Never save your credit card information on subscription or e-commerce sites.
  • Set up credit card transaction alerts through your online banking.
  • Lock your credit card through your online banking until you plan to use it.
  • Check your credit card balance at least once a week.

 

Overcoming Debt Challenges

Life is unpredictable; we all make mistakes and face circumstances beyond our control. However, help is available, and a financial reboot is possible. If you’re struggling with debt due to overspending, consult with a Licensed Insolvency Trustee for a Free Confidential Consultation. They’ll review your financial situation, discuss your challenges and goals, outline all your options, and provide an unbiased opinion on your best way forward. You’ll receive all the information, referrals, and support needed to address and overcome your debt for good.

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Licensed Insolvency Trustees are here to help. Get a free assessment of your options.

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