🙋 Raise your hand if you have the tendency to overspend!
If you do, I can assure you that you are certainly not alone. I was once an over-spender and recently I’ve been getting a few emails asking for my experiences with overcoming my overspending and taking a more frugal approach to shopping and budgeting.
So, today’s post is all about conquering an overspending problem. It can be done folks – I’m proof!
Shopping is fun right? I get that. I used to love buying things. I’d get a rush from buying the latest on trend jeans, shoes and handbags. At one point I owned over 10 Coach handbags and probably some 50 to 60 pairs of shoes. In my mind buying these things was a necessity. It filled some need and made me feel good.
If we’re being brutally honest, buying so many material goods helped me feel better about myself. Having a 150$ pair of Michael Kors running shoes made me feel like I’d somehow made it.
My overspending was definitely tied to my own insecurities about my place in the world and buying more, more, more was my way of keeping up with what society had manipulated me into believing established my self-worth.
Overcoming an overspending problem is possible.
It’s not easy and I wont lie to you and tell you that there is some magic recipe that will instantly prevent you from overspending. Instead, it’s a conscious decision you need to make.
This decision requires that you re-evaluate your relationship with material goods, figure out why you’re spending in the first place and come up with a solid plan to reduce your spending and kick overspending to the curb for good.
A Couple of Useful Statistics About Overspending
Overspending is a huge problem whether you can afford it or not. If you’re living in the paycheck to paycheck cycle, overspending can easily help you accumulate massive amounts of consumer debt that can be difficult or even impossible to pay back.
If you’re fortunate enough not to be live in the paycheck cycle, overspending can lead to massive reductions in your accrued savings and pose a serious threat to your long-term financial goals.
Here are a few statistics about overspending that you might find interesting from The Credit Examiner.
- 52% of American’s spend more than they make
- 21% of those have monthly expenses greater than their take home income
- Only 13.5% adjust their budgets the following month to get their spending back on track
- For every $1 earned, the average American spends $1.33
If we take these statistics and do a little frugal math to understand them better we realize that for every $1000 earned there is roughly $1330 being spent.
If we take it even a step further, every $10 000 earned equals $13 330 of spending which means a whopping $3 330 deficit. That deficit, whether it’s coming from your savings or is being absorbed by consumer debt is an enormous problem that seriously threatens your financial security.
With those numbers in mind, let’s explore a strategy that can help curb your impulse and overspending problems shall we?
5 Effective Strategies To Overcome Overspending Problems
1. Get Real About Your Relationship with Material Goods
This was the most important element of my strategy to overcome my own overspending.
Without making peace with my need to buy things and understanding the real reason I had the urge to impulse buy and consequently overspend I would have never been able to kick the habit.
Our perceived relationship with material goods and need to buy stuff when we just can’t afford it is fueled by “something”. That “something” might be rooted in feelings of insecurity, boredom or even pride. Whatever that “something” is – you need to figure out what it is and why you’re letting it push you into spending money on things that you don’t necessarily need and probably cannot afford.
When you’re dealing with overspending problems you’re often not even conscious of the overspending while it’s happening. Instead, you choose to ignore the fact that buying that extra pair of shoes means accumulating more debt because you’ve established those shoes as a priority in your life.
So, figuring out why you’re willing to prioritize buying those shoes rather than using that money to build up your savings or pay off existing debt is key to understanding why you overspend in the first place.
I cannot tell you how many times I rationalized my own overspending by making excuses like “I’ll pay for it later”, “that’s what credit is for” or even ” it’s not that expensive so why not”.
The problem with the buy now pay later mentality is that it usually isn’t a one-time thing. If you’re making those types of rationalizations to yourself, there’s a good chance that you do the very same thing on a regular basis.
2. Create a Realistic Budget you Can Stick To
Once you’ve gotten to the root of why you overspend it’s time to create a realistic budget to tackle that overspending and get your financial life back on track.
Realistic budgets (and I talk about this so often don’t I?) are really the cornerstone of maintaining a healthy financial life. Without a realistic budget you’re setting yourself up to fail. You’re basically creating an impossible situation that is doomed to fail because it doesn’t adequately reflect your true financial situation and lifestyle needs.
Realistic budgets do a couple of important things. First, they accurately account for all your money. This means that they don’t rely on projections, approximations or financial assumptions. A realistic budget is never created with the “I make or spend about X dollars” mentality.
Instead, realistic budgets are precise and accurate. They are created strategically and account for every penny of your income and every penny you spend whether that be fixed expenses like a mortgage and debt repayment or flexible expenses like food , cable and cell phone bills.
The benefit of creating a realistic budget is simple. It allows you to see exactly how much money you’re spending. And, in most cases the impact of overspending becomes shockingly apparent during this process which might be all it takes to help you curb your overspending for good.
So, sit down with a pen and paper and start creating a budget! The physical process of creating a realistic budget is an important step in reclaiming control of your finances and making progress towards your goal of curbing overspending.
3. Find Alternate Forms of Entertainment
Shopping can be fun friends. For me, it was an outlet and I absolutely loved the high I’d get from buying new pieces of clothing, adding to my shoe collection or scoring a gorgeous accent piece to decorate my home. I just loved it. Period.
Now, things have changed dramatically. I’ve gotten to a point where I actually dislike shopping. I don’t like the process of searching for what I need. Instead, when I know I need to buy something I either hit up the local thrift shop or order it online if I know I can’t find it elsewhere.
Shopping, buying things and accumulating stuff no longer fills a void. That void has been replaced by other forms of entertainment like spending time with my family, entertaining friends and enjoying life in ways that brings me happiness.
I wasn’t enjoying life when I was stuck in the guilt cycle that was overbuying. Instead, I’d buy stuff because I wanted it and then regret and feel super guilty about my purchases because ultimately I wasn’t spending our money on something that brought me true happiness.
Replacing the habit of overspending with a hobby that brings you fulfillment and joy is a key element in overcoming an overspending problem. By filling the void you were using overspending as a band-aid for you’ll be happier, more fulfilled and at peace financially.
Create a Financial Vision Board
Vision boards are all the rage aren’t they? A financial vision board serves to highlight why you’re making efforts at budgeting more effectively, reduce your spending and find a financial balance that is less stressful.
Without concrete financial goals in mind, it will be nearly impossible to stick to a resolution to reduce your spending and overcome an overspending problem. If you don’t have an end goal in mind you’ll easily get derailed because there’s no purpose fueling your choice to tackle your overspending problem.
So, think through your financial goals. Come up with goals that are realistic and attainable for you and your family. There are no goals too small folks.
Instead, the more precise and realistic they are the higher the chances you’re financial vision board will keep you on track. It would make no sense to set a goal to save $500 000 in 12 months if you’re making $40 000 per year. Sure, it’s probably possible with a ton of hard work and savvy but is it realistic for the average person?
A few examples of financial goals include:
- Reducing my spending so that I can funnel the money I save to pay off my credit card in a year.
- Cut down my spending so that I can bank the money I would have spent shopping to buy a new car with cash.
- Reduce my spending so that I can save the money I’d spend on buying unnecessary stuff and save for a down payment on a first home purchase.
- Slow down my spending so that I can live within my means and stop accruing consumer debt.
Once you’ve established concrete financial goals it’s time to put them into practice. The next time you’re tempted to go shopping and buy another pair of shoes, a new handbag or electronic gadget ask yourself if you truly need it.
If you convinced yourself you do in fact need it (which our brain has a great way of doing) ask yourself if the money you’re spending would be better spent on working towards achieving your financial vision board goals.
If you’re still adamant that you must buy all the things take a self-imposed cooling off period. Wait at least two weeks and reevaluate if the urgency to purchase the item still exists. I’ll bet that after a good cooling off period you’re likely not as interested in buying the item anymore. The novelty will probably wear off.
If you’re able to slow down and consciously move through these motions prior to putting yourself in situations where you’re likely to overspend you’re off to a great start at overcoming that spending problem for good.
Stick To Your Financial Diet
Like just about anything in life progress is often about taking baby steps. Progress not perfection right?
If you slip up and buy 4 things this month when you were previously buying 8 – pat yourself on the back rather than beat yourself up.
If you buy something and realize shortly after that you regret that purchase – return it and applaud your new found ability to recognize that you fell into the trap of overspending.
Committing to tackling an overspending problem isn’t easy folks and there are bound to be bumps in the road. Overcoming overspending really does require that you dig deep and figuring out why you started overspending in the first place. Without that knowledge and self-awareness it will be next to impossible to stick to any budget you make regardless of how realistic and feasible it is.
So, if you’re truly motivated to kick overspending to the curb commit yourself to sticking to a financial diet.
Be prepared for things to get difficult and to struggle at times – that’s perfectly normal and a part of any lifestyle change. The key is getting back on track when you fall off the wagon.
It’s about reminding yourself why you’re doing this and what greater goal is at stake and how your overspending is preventing you from reaching it.
Final Thoughts On Overcoming Overspending Problems
Be Honest About Your Spending
The first step is being honest about your overspending. If you’re still in denial or don’t acknowledge that overspending is causing you financial hardship or instability then trying to rid yourself of the habit of overspending will be nearly impossible.
To get in touch with the real numbers have a look at your bank statements for the last 6 months or so. Calculate how much spending is unaccounted for. That right there should act as sufficient proof that you’re probably overspending.
Create a Budget You Can Stick To Long-Term
Don’t create a budget that makes no sense for you personally. If you set unrealistic expectations like reducing your grocery budget by 80% you’re destined to fail. So, if you’re committed to tackling overspending you need to scrutinize every element of your budget and make necessary changes that will be relatively easy to stick to.
If you’re looking for a really great budget planner to help you get organized and create a simple budget that is easy to follow I cannot recommend this Monthly Budget Planner enough.. At only $5.99 it’s cheaper than any DIY budget binder you’re going to make yourself if you factor in the cost and time involved in creating, printing and organizing all the materials yourself.
It’s created in such a simple way that it makes keeping track of your money a breeze.
Always Remind Yourself Why You’re Doing This
Keep your goals close by. Refer back to them often to remind yourself why you’re tackling overspending. Without an end goal in mind it can become difficult to stay motivated!
Keep On Keeping On Even If It Gets Tough Sometimes
Things will probably get tough at certain points which is completely normal and to be expected.
Don’t let a splurge from time to time derail you. Instead, use the experience to evaluate and figure out why you fell off your financial diet and make necessary adjustments. After all, making a significant change to your financial life is about progress and not perfection.