Do you want to learn how to stop overspending, but have no idea where to start? Overspending is a common financial issue that can lead to debt and stress. Unfortunately, It’s easy to overspend nowadays, especially because we can buy things and have them arrive soon after. It has never been easier to buy food, shop for groceries, and even buy presents online and have them delivered to your door within 45 minutes! While this is a great advancement in technology, it also comes with some major drawbacks for people trying to learn how to stop overspending.
The temptation to spend money has been something I’ve struggled with since I started earning my own money. I know that it can be a common issue for other people too, and on my journey to spending less money, I learned quite a few things. This is why I decided I wanted to create a guide with all the helpful tips and tricks I’ve learned along the way. If they helped me, maybe they could help you too!
If you want to know more, keep reading!
Table of Contents
Step One: Understand Your Spending Habits
If you’re overspending, your money’s going out of your account and into someone else’s. Whether it’s a company, a restaurant or a retail store – money is going out way more than it’s going in.
Sometimes it’s hard to come to terms with your own spending habits, I certainly didn’t want to face it at first. Eventually, though, I realized that my habit was affecting my life and causing me a lot of stress.
I knew that if I didn’t control my spending, I was going to be in a lot of trouble. I was already in debt with two loans, and my income wasn’t enough to sustain myself and pay them off. I needed to make changes, and before I could do that, I had to start tracking my spending.
I know that when you’re learning how to stop overspending it’s overwhelming to know where to start from! This is why I’m going to give you 3 extra tips to help!
1. How to Stop Overspending: Track Your Expenses
A study showed that those who try to budget and track their expenses have better economic well-being! This is because those who track their expenses are more likely to make smart decisions with their finances. So why not try to do it yourself?
When it comes to tracking your expenses, it’s simple. You need to track every purchase you make, any day – any time. It doesn’t matter if it’s the tiniest purchase at the convenience store near you – track it.
Just by splitting up the picture in the image here, you can start keeping track of everything you’ve spent, down to the rest of the money you have left.
Being aware of all these components will help you raise awareness of your finances. The second I started doing this, I became painfully aware of how much I was spending. If you notice that you’re spending a lot of money in one area – highlight it. It’s going to be useful for the next step!
2. Identify Spending Patterns
Now that you have an active record of what you’re spending, you can start analyzing any spending patterns. This is a really important step if you want to learn how to stop overspending effectively because these patterns are usually what’s costing you the most money.
Spending patterns exist in all of our expenses. Categories such as bills, living expenses, and accommodation are staples in all of our expenses. It’s when these categories seem abnormally high that we need to take a second look. If you’re spending too much money during grocery shopping, then it’s a good idea to revisit your payments and make some changes.
Grocery shopping is just one example of many, you could note spending patterns on clothes, drinks, and entertainment services. It’s important to highlight these spending patterns and take note of them. Once you do this, you can start thinking about what you need, versus what you want.
3. Analyse Wants vs Needs
This might be difficult because it will require a lot of discipline. If you’ve been following this guide properly, you should now have identified your expenses and spending patterns. What comes next is deciding which of those expenses will take priority over others.
On a piece of paper, make a list of needs vs wants out of all the purchases you make. Needs should only consist of things that you cannot live without. Living expenses (basic needs such as food, toiletries, and rent) should all be under the needs column.
If you want to learn how to stop overspending and save money, you should identify which spending habits are based on wants. Things such as clothes, drinks, money spent on restaurants etc. are not a vital need. Don’t get me wrong, they are important and should form a part of your monthly budget, but they should not take priority over your other expenses.
Once you’ve created your list, you’re ready to create an effective budget catered specifically for you!
Step Two: Learn How to Stop Overspending by Creating a Realistic Budget
It’s time to create a monthly budget that will help you stop overspending, and start saving!
A budget is essentially a plan of how you will spend money each month. This will be based on your income, spending patterns and overall expenses.
This will only work best if you separate your budget plan into different categories based on your expenses. Rent, food, outdoor activities etc. all need their own category with their own spending limit.
If the idea of creating a budget is overwhelming, I’ve got some steps that will help you get started!
1. Set your Financial Goals
Everyone has goals, and it’s time to find out what your financial goals are! Do you want to save money for something specific down the line? A house, a car or a holiday? These are all goals that you might have without realizing it!
The biggest reason to learn how to stop overspending is to set up a more comfortable future for yourself. The more you save money, the more likely you will be able to sustain yourself in the future!
Think about what you want to achieve in the future, where you want to live or how you want to live your life. Then decide how much money you would need to do some of those things. Those will be your financial goals, and will motivate you to be more mindful of your money.
Once you’ve figured out why you want to save your money, you can move on to crafting your budget!
If you want a more in-depth guide on setting and achieving goals in general, I have an article all about it here!
2. Design Your Budget
Your budget is what is going to keep you from overspending constantly! It will make you aware of how much you’ve spent, and how much you can spend before reaching your limit.
This will be something you constantly refer to, if possible every single day! Remember, the more you track your payments the easier it will be to learn how to stop overspending.
I’ve attached a monthly budget planner here to show you how to model your own. You can also get it for FREE along with an expense tracker planner right here!
I do suggest that you follow the image as much as possible, as each category has a section for your spending limit, and how much you’ve paid in the area. It might be a good idea to write the amounts you’ve paid in pencil so that you can adjust it accordingly.
At the end of each month, you can tick or cross based on whether you’ve followed your budget for every category under the ‘achieved‘ section. This can help you be aware of your progress and can keep you motivated.
Another useful section can be found at the bottom, which lists the total income, expenses, and differences. You can calculate this at the end of the month to see how much money you saved! This will be especially useful for the next step, so read on.
3. Adjust as Needed
Life can be unpredictable at times, maybe you’ll eventually get a raise at work, or have to cover expenses due to a hospital visit. This is why you’ll need to be adjusting your budget per month.
Keep track of your expenses, as there might be some adjustments down the line. For example, if my landlord decides to raise the price of rent, that means I’ll have to increase the amount on my budget. It might also mean that I’d have to lower the spending amount for another category and make a sacrifice there.
To learn how to stop overspending effectively, you have to be willing to make the necessary cuts at times.
It doesn’t mean that every time you adjust your budget it will be to make sacrifices, some money might come your way and you might be able to increase your budget! It’s up to you to be responsible enough to take note of your expenses/income and adjust as needed.
Step Three: How to Stop Overspending by Avoiding Credit Cards
Even if this doesn’t apply to you, I would still read this step.
Using credit cards has its benefits, but for people who end up over-spending, there are way more cons. When you use a credit card, you are using money that you don’t have. You essentially are buying now and paying later.
When you have a credit card, your bank will usually request a minimum payment every month. This might seem simple enough, but if you tend to overspend, the likelihood is you will max out your credit card pretty quickly.
When I first got my credit card, I managed to use all of the credit limit within a few days. Afterward, I spent 6 months paying it off slowly. Sometimes, I had to miss a few payments because I had other expenses that took priority, which as you can imagine wasn’t a great experience. The point I’m trying to make here is that a credit card can easily turn into an un-needed expense. Try to avoid having one in the first place, or if you do, use it for emergencies only.
So What Should I Use Instead?
Ideally, you can use a debit card or cash instead. My reasoning behind this is that with these two options, you’re spending your own actual money. For example with cash, you have to physically part with your money which can make you more aware of the amounts that you are spending.
Nowadays we’ve moved onto contactless payments which make our lives easier, so it’s understandable that you might not use cash as much. However, it’s still a good idea to have some cash on you!
For debit payments, you can set up a savings account and put the bulk of your money in there. Your other account can have a set amount of money and once you’ve reached that limit, you will not be able to spend more.
These are all great ways to keep you aware of your spending and accountable for your purchases! Try them out if you want to learn how to stop overspending the right way!
Step Four: Figure Out Your Spending Triggers
Spending triggers are those items that end up tempting you to spend a lot of money. This could be anything from food to clothes. Sometimes it’s not just an item but a specific emotional state that can be a trigger. Usually, these triggers are the key to why you are overspending, and targeting that is the best way you can learn how to stop overspending.
The previous steps are going to help you here because identifying spending patterns is one way to figure out your triggers. From my spending patterns, I noticed that I was spending a lot of money on online purchases. I would buy things I genuinely didn’t need and would end up never using them.
I realized that I needed to cut down my online shopping and stop myself from frequently visiting those sites. To minimize the temptation, I had to stop it from its source.
Besides that, keeping a ‘spending diary’ is also a good idea. You can use it to track your emotional state around your purchases, which might give you a lot more insight into your spending habits. In my case it wasn’t just the online shopping that was the issue, but my emotional state right before it.
I started noticing that whenever I was feeling upset, stressed, or even bored I would instantly try to buy something to make me feel better. It felt a lot like I was trying to fill an empty void inside of me with something that would only bring me temporary happiness.
If you’re noticing that your spending triggers also happen a lot due to your emotional state, then you need some strategies to help yourself deal with the urge. A lot of the time, it’s a good idea to distract yourself from the urge to spend during a tough moment by doing something nice for yourself. This could be something comforting, like putting a face mask on, playing a video game, etc. The point is to soothe what you are feeling with something comforting, rather than a purchase that you are likely to regret in the future.
Step Five: Get Support from Others to Learn How to Stop Overspending
Overspending is not a joke, it might start off as a small issue but it can easily spiral into something bigger. People who overspend can end up going into debt which can cause feelings of anxiety and panic.
In my case, I needed support from others during my journey to stop overspending. I was already seeing a therapist at that time which also helped, but I also confided in my partner and my friends.
This helped me remain accountable for my actions and even more aware of my emotional state. Also, having someone to check in with can motivate you to stay on track and provide encouragement when you face challenges.
Even if you feel that this issue is something embarrassing, there is no harm in opening up to someone else. Overspending is a real issue and the guilt that comes along with it can push you to keep it from others. The truth is, getting support from others with your overspending is probably the best way to learn how to stop overspending for good.
No issue that you are struggling with is pathetic or embarrassing – remember, in some way, we all have our baggage and issues. It’s the way that we strive to help ourselves that matters, so don’t completely cut off the option to ask for help!
Conclusion
Stopping overspending requires a combination of self-awareness, planning, and discipline. I struggled with it myself and am not embarrassed to say that there are days I still do. Remember, learning how to stop overspending is a marathon, not a sprint. Stay committed, be patient with yourself, and celebrate your progress along the way!
Have anything to add? Let me know in the comments below!
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