Spending more money than you have? Regain control of your finances with these 11 tips to stop overspending money you don’t have. You’ll be on your way to a better budget in no time!
Are you overspending your money? It’s a more common problem than most people ever realize. Overspending more than you expected or more than you had budgeted for a purchase or bill leads to financial stress, a budget that is out of whack, financial crisis and more.
In other words; overspending is bad juju.
But, you have absolutely come to the right place if you’re realizing that you’ve lost control of your finances. Learning how to stop overspending is not going to be an easy road for anyone, but the tips in this post will help you figure it out.
You just need to stay committed to it once you start.
Signs you might be overspending
Overspending or busting your monthly budget isn’t something that sneaks up on a person. There are very clear signs that something is going on. It’s only after you’ve recognized the signs that you can begin to get a spending problem under control.
The biggest sign of overspending is not having enough money to make it to the end of the month and are living paycheck to paycheck. Simply and bluntly put, if you are running out of money before the month’s end and the first deposit of the new month, you are spending too more than you have and are on a direct path to a big financial issue that may take you and your entire family down with you.
A word about inflation: As I wrote the paragraph above, I knew I would need to quantify something. The world as we know it is experiencing higher prices and inflations like most of us have never known in our lifetimes. This too can cause a shortage of funds, higher credit card debt and the paycheck to paycheck cycle. If that is the case for you, you still may need to do a lifestyle adjustment. Simply put, you can’t pay out more money than you have coming in without amassing larger amounts of debt than you can handle. Either follow the tips in this article to stop your money from bleeding off into the unknown or find ways to earn extra money so you can pay for what you need and want.
Another signal that you are overspending is buying things you don’t need. I don’t mean gifts or that once in a blue moon splurge. I mean buying a whole bookshelf full of collectible Star Wars figurines (as an example) when your budget says you need to pay the electric bill.
Finally, another blatant sign that your spending patterns may need a tune up is someone commenting. It likely won’t be a warning, but Americans tend to comment when something surprises them. If you notice your friends commenting on the number of receipts in the bottom of your purse or talking about how much shopping you’ve been doing lately, you have very likely lost control of your urge to spend.
Wanting to have nice things, things that interest us and products that make us look good is normal. It’s human and no one can fault you for those things.
But simply put, if your behavior is going to cause a catastrophic failure to your financial goals in life, that behavior needs to be changed.
What causes a person to overspend?
At any given time, you could ask any recovering spender why they overspent and chances are they would be able to tell you. There’s not a single person who is whipping out their credit cards or pulling cash out of their wallet without being able to tell you why.
A few common reasons for overspending are:
- Emotional spending or retail therapy
- The need for self rewards
- Impulse purchases
- Lifestyle creep or lifestyle inflation
Knowing why you’re spending a lot of money when you logically know you shouldn’t be is the very first step to teaching yourself to stop overspending.
What do most people overspend on?
Next you’ll want to be able to identify areas that you may be overspending on. Like the reasons for overspending, the areas that most people overspend are fairly common. Without knowing where to start, you are not going to get far.
Places that most people commonly overspend:
- Their kids
- Impulse buys
What is the best way to stop overspending?
Knowing how to stop overspending can be organized down into eleven very simple steps that anyone can do.
Yes, I know that eleven steps may seem like a lot. They’re so easy though that you won’t realize there are eleven. And in the long-term, they’re well worth doing to help put your checking account back where it should be.
Know Your Wants and Needs
Confusing our wants and our needs is usually the first reason that folks begin overspending. We think we need something when the truth is that what we’re thinking about is a want and is not a necessity.
To lay this bare for you, we have very few actual needs in our lives and most of them are regular monthly expenses. Housing, warmth, food and water, clothing, other utility bills, life saving medication and transportation are the bare minimum.
Anything above and beyond these are wants. These can include takeout, the gym membership you don’t really use, expensive car payments when you could be driving a beater, kids sports, movies and other “fun” activities people tend to think they need.
Audit Your Bank Account
Your bank account is the single best resource for finding places you’re overspending money. Doing a realistic, hard audit of your accounts, will not only show you where you’re overspending, but also how much.
Since you’re already aware that you have a spending problem, do a full audit for the past 6-8 months bank statements at a minimum. In fact, a year is actually best to provide a much better picture of your spending but a six month minimum is a good place to start. By the end of the six months, you should have at decent idea of where things lie for you financially.
If you’ve never done a full spending audit, it’s not as hard as it sounds. You will need a spending tracker. I like THIS printable spending tracker, but if you prefer an actual book type, THIS account ledger is also one of my favorites. I use the printable version for our family finances and the hard copy for my business accounts.
After you’ve decided which to use, scour your bank account for each category type of transaction. Keep a running total of each category so you’re able to see where the biggest issues with your spending habits lie.
Re-Create Your Budget
After you have your bank accounts audited. you’ll want to completely recreate your budget. This step is especially important so do yourself a favor and don’t skip it.
Take your bank account audit and make a list of any unnecessary wants you’re paying for. Before you get started recreating your budget, cancel any subscriptions that needs cancelled. Do it now so you avoid being charged again.
Next, make a list of your true needs. Again, remember to only include your real needs. Don’t forget to add budgets for the grocery store, rent, any debt payments you make; especially those on credit card balances, and so on.
Take a look at your check amount for your next payday and dole out the money to cover expenses. Do this with each paycheck you receive until the end of the month. At the end of the month, whatever is left in your monthly income should be transferred to your savings account.
Stay in Your Budget Often
Having a recreated budget is only the first step. If you simply create your budget and then put it away, you’ll stand a very, very good chance of forgetting it and finding yourself right back off track again.
Out of sight out of mind applies here.
Instead, stay in your budget. In other words, check it and update it everyday. In fact, at first, you should update it as “real time” as you can. Doing so will keep it in the forefront of your mind and make it less likely that you will overspend.
Stay Out of Stores (or Websites)
If you’re trying to learn how to stop spending money on unnecessary things, the worst thing you can do is spend time in stores or on websites that encourage you to spend money.
Social media is included these days with spending temptations such as TikTok shop.
It might seem silly but it’s basically just teaching yourself to avoid temptation.
The more often you’re in the store even when you’re just buying groceries, the more you’re going to spend. Impulse buys, paying higher non-sale prices, and more will keep you spending money on things you don’t necessarily need to or want to.
And the more you’re on sites that offer online shopping, the bigger the risk to your finances.
This also includes your email. As you’re working on breaking your spending habit, take the time to unsubscribe from any marketing emails from websites that want you to spend money too. Things like store websites that you’ve placed orders with and more can all help you overspend. After all, some of those deals are really good.
Your inbox shouldn’t be a financial temptation.
Have a (Few) No-Spend Months
Have you ever heard of a no-spend week or month? While I don’t believe that no-spend months really fix the problem of a spending habit, they will help you to stop spending money long enough that you can build a starter savings.
If you’ve never done a no-spend month, the concept is pretty simple. You only spend money on your absolute needs and do not buy anything that is not a need or is unnecessary. It can also be helpful to start smaller if you’re new to a spending pause. Starting with a week and working up to a month or longer is best.
If you’re familiar with them and have done them before, try to go for a longer time periods. A month is a great start and will give you a great opening to a longer time period. Yes, longer spending freezes can be done. In fact, my own family is getting ready to start a year long long spend challenge at the beginning of 2021.
This applies if you’re trying to stop spending money on food as well. Doing a pantry or freezer challenge works great for helping to stop overspending very quickly. To do one, use a pantry and freezer inventory like THESE to make a list of what you have available. Then, makes meals only from those ingredients for whatever time period you have set.
Lock Your Debit Card
I could do like a lot of others will do and tell you to use cash only, but honestly some people just do not do well with cash spending. I am one of them. If I have cash, I spend it far quicker than I do if I use my debit card instead.
But there’s one reason for that. I keep my debit cards locked.
The reasoning behind it is the same as people who use cash only. When your debit card is locked, you have to physically open your banks app and unlock it to spend money.
Doing so makes you far more aware of the money you’re spending and in my case, often makes me rethink the products in my cart or on my shopping list before I buy them.
Track every dime you spend
We’ve already touched on this a bit, but if you’re not tracking how much money you’re spending and where it’s going, you’re going to lose money. Using a spending tracker or a ledger book is a great way to do this.
But, if you would rather not spend money on those things, a small notebook will work as well. When you spend money, write down where and how much. At the end of the day or week, categorize them so you keep things straight.
Not everyone and everything has your best interest in mind and sometimes these things can cause you to overspend. There really is truth when people say that the people you surround yourself with influence every aspect of your life.
If you’re surrounding yourself with people who are constantly overspending themselves, they’re going to lead you to overspend as well. FOMO is a real thing and watching those in your life do things that you’re missing out on can be very bad for your budget.
In other words, if the people in your life are making you want to keep up with the Joneses, maybe it’s time to take a break from them. Or at the very least, make sure you stay mindful and aware when you’re spending time with them.
Set Attainable Goals
When you first begin working to stop overspending, it can be easy to want to set huge goals for yourself from the very start.
Don’t do this. Instead, set reasonable and attainable goals that you can reach in a shorter amount of time. Just like anything, if your goals are too lofty, they’ll be harder to reach.
If, by chance, you don’t reach them, you’re more likely to get discouraged and quit working toward it.
Instead, set your goals as smaller bites of larger goals. For instance, if you want to stop living paycheck to paycheck and save a $5,000 emergency fund, start with saving the first $100. Once you reach that, reset the goal to $500 and so on. By staggering your goals and upping the ante every time, you’re setting yourself up to be more successful.
Give Yourself Grace
Finally, doing this is hard. No matter what the reason behind your overspending, it’s easy to get into the habit and hard to break.
You are very likely going to fail once or twice or eleven times before you finally fall into a routine you can build on.
Give yourself grace when this happens. You’re human. You make mistakes. We all do. Pick yourself up and restart and eventually things will be rolling smoothly.