Why is it most of us seem to spend just a little more than we have in our budget every month? Even when we think we’re getting ahead, we end up overspending – consistently.
This actually isn’t as big of a mystery as it may seem. According to psychological studies, many of us overspend because we feel disconnected from our money.
In our modern world, we can work, earn money, have that money deposited into our checking accounts and spend the money without ever laying eyes on a single dollar. That makes it really hard to connect with money, as it’s really more of a concept than a reality.
But there’s hope. This guide will show you how to stop overspending by reconnecting with the money you earn.
If we begin to change the way we see money, we can change our habits. Here’s how to do it:
1. Use cash.
To get an idea of just how much money we spend on a weekly basis for things other than bills and debt obligations, try not using your plastic.
Take out as much cash as you think you’ll need to cover lunch, groceries, dry cleaning, gas, your morning coffee, your afternoon coffee – you get the idea. I’ll bet you run out of money before you know it.
We spend far more than we think we do by using our debit and credit cards. Using cash will help you to see just how much money you spend – and hopefully where you can cut back.
2. Set spending limits.
Each of us should have a budget that determines how much we spend and on what. But the reality is many of us aren’t that disciplined.
Guess what? It’s time to start.
Even if you don’t have it in you to create a full-fledged budget just yet, set limits on yourself as to how much you will spend on nonessential purchases each week. Start with this and eventually work up to a complete budget that details where all of your money goes.
“Trying to stop
overspending requires work.”
3. Plan your purchases.
Walking into the store without a plan for exactly what you’re going to buy is like hitting the road without a destination. Sure, you’ll end up somewhere, but where? Or rather, with what in your cart?
One of the biggest reasons we overspend is we don’t have a plan, so we pick up whatever appeals to our eye. This is a dangerous way to shop. Instead, write out a plan for what you need to buy and go get it.
Ideally you will keep a running list and make multiple purchases at once – but always with a plan.
4. Focus on your needs, not your wants.
When it comes right down to it, there’s actually very little we really need.
Sure, there are things that make our lives better, but do we really need them? This step is very personal and can only be answered by each of us individually.
Think of where you are in life, what your financial goals are and how much of a problem you have with overspending. Then you can decide on where to draw the line between wants and needs.
5. Create a system of rewards.
One of the things about stopping a bad behavior is that even if it’s ultimately good for us, it can feel like we’re being deprived.
To avoid falling back into the same trap, set up a system of small rewards that can help you to appreciate the hard work you’re doing.
These rewards should be based on a specific accomplishment and should be symbolic, not extravagant. A favorite dessert or a movie out, a new blouse or pair of shoes – whatever will make you feel good and still stay within budget.
Trying to stop overspending is a challenge that requires both insight and hard work. If you look hard at where your money is going, you’ll be able to identify where to cut back. Then it just takes effort on your part to do it.
Hopefully this guide will give you the outline for how to stop your overspending and send you down the road toward good financial choices. In that case, I wish you the best on your journey!
Photo source: huffpost.com
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