Do you find yourself accumulating a bigger balance on your credit card every month? Are your closets, drawers, and cabinets overflowing because you keep buying things you do not need? Do you look at your bank account balance a few days before each paycheck and wonder where all the money went? Is it common for you to go to the store for one item and find yourself coming home with ten? Each of these can be signs that you have an overspending habit - where you spend more than you can afford. Overspending can cripple you financially and hold you back from reaching your long term financial goals, but the good news is that you do not have to resign yourself to chronic overspending.
Tips to Break Bad Spending Habits
Get on the same page with your spouse
If you are married and manage your money together, your individual efforts may not be able to change your joint finances if your spouse just spends the money instead. Sit down together to talk about your spending habits, and resolve to work together to cure any overspending habits you may have.
Track your spending, so you know the extent of your overspending
It is hard to solve a problem you don't know exists. If you suspect you've been overspending, keep a log of all that you spend for a week, then a month. Note what you bought and how much it cost, and then add up categories at the end of the week and month. You may be shocked to learn how much you are spending on clothes, coffee, fast food, electronics, gifts, or other items that fuel your overspending.
Decide what you would rather be spending on
It helps to have a tangible financial goal to focus on when you have the urge to spend on things that are going to block you from reaching your goal. You may decide you want to pay off a credit card, build an emergency fund, get on track with retirement savings, save for a house, or take a dream vacation. Once you determine your goal, it is easier to cure your overspending habit because every dollar you spend takes a dollar away from your goal.
Budget how much you will spend in each category
It is often difficult to completely stop spending. Some spending can be appropriate for your lifestyle and helpful for your mood and well being. If so, decide how much you would like to spend in each category of purchases. You can budget these amounts per month or pay period, depending on what makes more sense to you.
Use cash so you can't overspend
Swiping a card is far too easy, and you might spend more than you intended to in a category without even realizing it. Once you have a budgeted spending allowance, withdraw this money in cash and put it in a special place like an envelope or in a dresser drawer. When the cash runs out, don't spend any more on that type of purchase until you get your next allowance at the beginning of the month or after your next paycheck comes in.
Check in regularly to track your progress
Even if you think you have a foolproof budgeting system that will keep you from overspending, you may find ways to cheat, like saving up your spare change and using it on purchases. Every few months, spend a week tracking your actual spending of every penny to make sure you are not letting bad habits go unchecked.
Compete with a friend for support and accountability
It is always helpful to have someone you can talk to about your spending habits and goals, and a friend who is in the same boat as you can be the perfect person. Compare notes on a regular basis to see how you are doing, and maybe even set up a friendly competition to see who can cut their spending more. Plus, when you have a friend who is trying to cut spending too, you can find inexpensive ways to hang out together, which helps you both achieve your goals.
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