Spending money never gets old, and it's not necessarily a bad thing. However, overspending can take a toll on your budget, landing you in avoidable debts. Suppose you begin every month with the best intentions not to overspend according to your budget, but ultimately find yourself buying needless things justified by the 'a little won't hurt' attitude. In that case, you are most likely looking at an empty bank account by the end of the month.
To curb overspending, you first have to admit that there's an issue when managing your finances, then take the measures required to take control of your money. Here are tips on how you can stop overspending your money.
Make a budget
After getting your paycheck, the first step is to take a hard look at what you earn versus how you want to spend the money. Looking at how much you spend buying luxury items, clothes or electronics can be a major wake-up call for you. Here are a few steps to help you while creating or mending your current budget;
- Calculate the amount of money you earn every month from salary or other sources of income
- Prioritize your monthly bills, from rent to entertainment.
- Include savings in your budget. Try following the '50/30/20' rule, where 50% of your monthly income goes to the necessary expenses, 30% for entertainment and lifestyle preferences, and the other 20% goes to savings or paying debts if you have any.
- Lastly, put your budget to the test and compared it to what you had initially planned. Make any adjustments if need be.
Stick to using cash
Using cash automatically prevents you from buying unplanned items, especially online. Instead, try using a cash-only envelope system when budgeting for your stuff, as this enables you to stick to the plan. Gather a few envelopes for all your adjustable expenses and label them according to how much you've allocated. Alternatively, you can set aside your weekly budget in one envelope and draw out the amount you need every day. The goal is to look for a plan that'll help you stick to the budget.
Know your spending triggers
Most people spend money without thinking about it. However, if you want to save money, knowing what your spending triggers are and why you have them can go a long way. Some of the things that trigger spending money include peer pressure from friends and family, current mood, or other factors that allow impulse buying, such as window shopping online. Keeping a diary is one of the best ways of tracking your spending triggers. It can help you gain control over overspending your money and limit how often you give in to the desire of impulse buying.
Track your expenses
Even with the best intentions, most people find it challenging to stick to a budget. The truth is, an average person possibly thinks they know how they're using their money, but the reality is that most people can't account for every penny spent every day. If you find yourself overspending despite having a budget, consider using a budget app to track where your money actually goes. Using a credit or debit card doesn't make it easier to track your expenses. To avoid overspending, don't save your credit card details on websites, as this makes checkout very easy. Also, leave your cards at home to limit the temptations of using them. However, if you don't want to go entirely card-free, give yourself some ground rules for using them.