3 Simple Steps to Stop Overspending

stop overspendingIf you admit to being an over-spender you’re not alone. Total debt in the U.S. has reached $11.9 Trillion dollars while the average american household has over $7900 in credit card debt, $10,000 in auto loans, and over $100,000 in mortgage loans. While robust consumer spending is an important driving factor for the U.S. economy, not being able to control personal spending can wreak havoc on your finances.

 

How do I know if overspending is a problem for me?  If you can answer yes to any of the following questions, overspending just may be an issue for you.

  • You frequently leave the store with items you didn’t plan on purchasing
  • You don’t open your bills when they arrive in the mail
  • You bounce checks
  • You often see late charges on bills
  • You hide spending from your spouse or family

 

Total Debt Balance

 

 

Take a Good Look at Your Spending Habits

Do you know how much you are spending?  This may seem like an obvious question but you would be surprised at how many people struggle with that question.  Start by making a list of all of your bills and spending for 30 days.  By analyzing where you are spending your money you can begin to see patterns and start the process of reigning in spending.  Do you make more purchases on or near payday?  Do you dine out mostly on the weekends?  Seeing your expenditures on paper will reveal which categories present opportunities to reduce spending as well as highlight potential reasons for your over-spending.

  

Another option for analyzing your spending habits is to use a tool like Discover’s Spend Analyzer that allows you to quickly see where your money is going and help you make smarter spending choices.  Whatever method you choose, the important thing is to decide on an option that works best for you and not be afraid to try something new if your first attempt doesn’t work.

 

Make a Plan

Getting a handle on where your money is going is a key first step in managing your spending.  Having a plan for how you are going to tackle overspending is even more important if you hope to reach your financial goals.

Making a plan to cut spending doesn’t have to be complicated, in fact there are several options to simplify the whole process.  Most major banks offer free online budgeting software and there are some great Smartphone apps such as Mint that make budgeting a breeze.  In fact, most budgeting software automatically categorizes transactions and creates a monthly budget based on your average spending.  How cool is that?

Creating a baseline budget and tracking your spending is relatively easy as you just learned.  It takes a little more effort to cut spending but the results are well worth it.  I always recommend starting with small cuts to discretionary spending like dining out or travel. Simply eliminating one meal out per month and having water with your meals can  result in savings of over $500 per year.  Once you build confidence that you can find ways to save money without drastically altering your lifestyle, you can tackle more challenging categories like your mortgage or utility bills.

The next step is to take these savings and use them to pay down high interest debt and invest in an education savings or retirement account.  A great way to do this is to setup an automatic transfer from your checking account to your bank account before you have a chance to spend it.

 

Make a Change in Your Spending Habits

So you know you have a problem with spending.  You even know exactly where your money is going.  The best budgeting software can only identify where you are over-spending, it can’t stop you from making a purchase.  In the end, it will be up to you to modify your own spending behavior.

If you are routinely making large purchases on or near paydays, try leaving credit cards at home and use cash instead.  Try inviting your friends over for a potluck dinner on a Saturday evening instead of dining out.  The sky is the limit when it comes to ways to reduce spending and you may even have a great time in the process.

When you are truly motivated to change your spending habits you will find methods to control spending that work best for you.

 

Readers: Has overspending ever been an issue for you?  What strategies did you use to help stop overspending?

Stay Connected with The Frugal Toad

Subscribe to our e-mail newsletter to receive updates.

, , , , , , ,

9 Responses to 3 Simple Steps to Stop Overspending

  1. Liz 09/10/2016 at 5:38 am #

    I stopped overspending when I started budgeting, which has helped determine which one is needs or wants. Budgeting really is the trick to not overspend. I am just glad that I have been into it.

  2. Paul 09/08/2016 at 8:17 pm #

    Good for you David! As you have shown, it’s about making conscious decisions about spending each and every day.

  3. David @ Thinking Thrifty 09/08/2016 at 1:31 am #

    I spent years living payday to payday until I went back to basics and made a budget and meal plans. I started taking it seriously in January this year and have already saved £4,800. Not bad considering I’d spent years saying I didn’t earn enough to save. It’s all about the mindset!

  4. Christina @ RaisingSavers.com 07/07/2016 at 9:38 am #

    For our family, monthly meal planning and shopping made a huge difference, as I tend o impulse buy at the grocery store. Also, having a list and sticking to it, shopping without the kids, and not window shopping (in storea or online) helps a lot. Because as I always tell myself, it’s never a good deal if you don’t need it!

  5. Irene Haidner 06/03/2016 at 5:41 am #

    Great article! Seems so easy doesn’t it? Just stop spending. 🙂 In my case I tend to leave credit cards at home and make a list when I go out and usually stick to it. Odd time I may find something else outside my “needs list”. I think if you take the time and make decisions not based on impulse but rather after you’ve thought about it for a while, you tend to realize that you don’t actually need the item in question. My best practice is to walk away and if by the next day I’m really still thinking about it I may return to make the purchase. Mindfulness is a great tactic to utilize.

  6. EarnSmart 04/01/2016 at 10:40 am #

    This is a great post Paul. What’s interesting is impulse purchases don’t happen exclusively in stores, there’s actually an increasing number of retail therapy / impulse transactions that occur online. Did you know that on average, Americans are estimated to spend over $1,700 on e-commerce purchases in 2016?

    As you know we’re also aiming to help people improve their fiscal responsibility. Our hope is that by giving our users a mechanism to automatically save then spend responsibly, it will help curb the desire to make impulse purchases!

  7. Paul 10/02/2015 at 6:10 am #

    I agree with you Kay that having a budget and sticking with it is the key to acheiving your financial goals Kay. Many people struggle when there is an unexpected expense and they have little or no emergency fund so it’s important to build an emergency fund and keep it funded.

  8. Kay 09/30/2015 at 10:28 am #

    I have found that making a budget and sticking to it eliminates overspending and grows savings with seemingly little effort. Yes, it’s tough when you first get started, and you’ll overfund some areas and underfund others. But stick to it, and in time, it is easy and becomes second-nature, and over-spending is no longer a worry.

  9. Jayson @ Monster Piggy Bank 09/05/2015 at 7:38 pm #

    Overspending has been an issue to me. What I do to stop this practice are that I live within my means and adopt a game plan that can help me spend less like having a spreadsheet detailing my expenses and that I save before I spend.