When it comes to financial habits, an extremely poor one is overspending. Many people fall into this trap of spending too much of their money and do not even realize it. Overspending can not only skew your monthly budget but also affect your financial health in the long run.
However, there is no need to fret. We have compiled a list of hacks for you to help you stop spending too much money. With these tips, you will not only be able to manage and control your spending but also save significant money, allowing you to accomplish all your goals. But first, let us take a brief look at why people tend to overspend.
Why people overspend?
Many people tend to live beyond their means, spending money with a free hand. While this might not appear to be a problem in the immediate term, over the long term this can affect your financial stability and even land you in debt. But why do people overspend? Here are some common factors:
- Lack of a budget
Many people tend to spend more money than they should because they do not plan. Lack of a budget can result in unaccounted spending in areas not necessarily important for a satisfactory lifestyle.
- Impulse buying
Almost every single one of us is guilty of shopping for something extra because it was on sale. That extra pair of jeans or tins of canned soup at half the price may sound like a good deal but they will only shoot up your expenses on the negative end.
- Underestimating the small expenses
Often it is the expenses we consider minor add to the highest charge on our monthly expense list. That daily morning coffee from a café, take out on the weekend, etc. total to significant amounts on our spending list.
- Need to keep up
Many of us tend to overspend because we don’t want to be left behind when it comes to comparison with our neighbours, colleagues, family members, etc. Which means we end up spending more just to show off instead of spending on what we need. That bigger television, more expensive clothes, swanky car, etc. do not necessarily have to mean enhanced convenience and only add to the spending burden.
How to curb overspending
If you are caught in the trap of spending more than you need to, it is time to fix your habit and go for a complete overhaul where your spending pattern is concerned. Here we have compiled a few tips to help you stop spending too much money:
- Plan a budget
Nothing works to prevent overspending like a strict budget. To plan a budget, note down your income, followed by a list of all your necessary expenses, the utilities and bills including rent payments and loan instalments, investments, as well as all the frivolous expenses. Chart a budget where you allocate fixed amounts for each of these, setting aside the least amount for frivolous spending.
- Stick to your budget
Making the budget is the easy part; it is sticking to the limits you have set for yourself in your budget that is the tough part. However, sticking to your budget plan does not require a lot of effort; all it needs is a little prudence.
Keep a track of every penny you spend. If you are having trouble sticking to your budget you can also make use of one of the may mobile applications available for free which you can use to enter your budget and your expenses.
- Think overnight before buying
Impulse buying is perhaps the biggest culprit when it comes to overspending. The only way you can prevent spending too much on purchases you do not necessarily need is to think before you pay. A great rule of thumb is to sleep over any purchase decision for at least two nights before you spend your money.
If on the third day you still think you need to make the purchase, go ahead. But chances are, if you were only planning on spending on an impulse, you will get over the urge and save yourself quite a sum without shopping for something you did not really need.
- Shop with a list
The most money anyone spends is when shopping. From buying household items to groceries, even shopping for clothes, if you go without a plan, you will end up spending more money than you need to. To avoid spending more than your budget, make a list beforehand and allocate the amount you will need to pay for all the items. Do not be tempted to buy items with discounts and offers in bulk unless you need to and stick to your list.
- Stay in more often
Going out on a weekend is a sure invitation to spend more money than you need to. No matter how hard you try, going out will necessarily mean that you end up spending on food, drinks, entertainment, etc. Instead of going out, to save money in place of spending, try to spend your evenings and holidays at home. Plan to read a book or watch a movie at home with a home-cooked meal. This does not necessarily mean you have to stop going out altogether and you can indulge yourself once in a while. But the more you stay at home, the more you will resist the urge to spend more.
- Cancel subscriptions you do not need or use
Many of us tend to have subscriptions to publications, places, services we do not use any longer. Be it gym memberships, magazine subscriptions or club memberships, go over a list of all the places you have subscriptions to and evaluate if you need them. For instance, instead of an expensive gym membership, go for a run in the park or workout at home. Read articles on the phone for free; limit your membership to as few clubs as you can.
- Avoid takeaways and eating out as much as you can
Eating out and ordering takeaway are among the biggest spends in anyone’s budget. If you are serious about cutting back on spending, a good step would be to eat home-cooked meals as much as possible. You might feel lazy about cooking your own meals but remember, a cup of coffee or a sandwich made in your own kitchen costs just a fraction of what you would pay for the same things at a café or restaurant. Plus, home-cooked meals are healthier, so it’s double advantage.
- Opt out of automatic payments
Many a time, we tend to set up automatic payments for services, often due to attractive offers. Cancelling out automatic payment will allow you to determine whether you need the service for a particular period and pay only for the time that you need the service for and save the money for the period you do not require the service in.
- Cut back wherever you can
Aside from the abovementioned instances, you can also go over your monthly and annual expenses to see where you are making frivolous expenses and cut back on these to avoid spending too much money. For instance, rather than paying someone to mow your lawn, you could do this by yourself over a weekend. Again, instead of travelling in a cab, paying expensive fare all the time, opt for public transport or carpool.
While it might appear daunting at first to cut back on your spending when you have the habit of spending with a free hand, with these tips to follow, you will be able to cut back significantly on overspending and be well on your way to prudent financial management.
Aahna Gandhi is an enthusiast traveller, writer and a PR Professional. She likes sharing memorable moments from her travels and inspire others to live a life full of wonder. Known for her content, she has worked for travel, technology, lifestyle, health sectors as well as finance.
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