Overspending? Helpful tips to curb your spending habits

Let’s face it – spending money can be fun! It’s also a necessary part of life, but spending too much is when financial problems can arise. The key is learning to spend your money the right way and to find ways to stop overspending. After all, overspending stops you from meeting your financial goals. Are you ready to learn some practical ways to stop overspending?

Understand overspending and why it happens

Overspending is spending money on things you don't need or plan to buy. It's spending when you shouldn't. Some people call it 'living beyond your means,' and it happens for a variety of reasons. 

From boredom to emotional stress — people have different reasons for overspending. But looking deep into the cause of your overspending is key to overcoming the habit.

Learn your triggers 

A spending trigger is a thought, emotion, or feeling that causes you to want to spend money on things you don't need. Think about the reasons you overspend. Then you can identify your triggers. For example, is it boredom or emotions? Is it a lack of good money-management skills? Identifying your triggers can help you find ways to stop overspending.

Budgeting is an essential tool for managing your finances; without one, you may be overspending without even realizing it. By using a budget, you’ll learn to recognize areas of overspending and differentiate between necessary and discretionary spending. 27%* of Americans feel like they don’t need a budget, but when you have a clear picture of your finances, you can make your money work harder for you and start working toward your financial goals. 

Create a realistic budget and identify your top financial goals

Learning your triggers is helpful, but you must also conclude that you need to reduce your spending. This might take reaching a point where you're worried about your finances or finding that your debt keeps growing. The good news is you can take control of your finances by doing two things: Set up a budget and list your top financial goals. 

Tips for setting up a budget that works for your family

A budget begins by listing your income. After that, distribute your income for your expenses and savings. A helpful budgeting strategy is the 50/30/20 rule. This rule states you spend 50% of your income on 'needs,' 30% on 'wants,' and 20% goes into your savings account.  

Tips for developing financial goals

Financial goals guide you. They give you something to work toward, and you improve your chances of reaching a goal if you first set one. Start by thinking of some short-term goals you want to achieve. These are goals you want to achieve this year. For example, would you love to pay off that credit card bill you've been avoiding? Or, maybe you're concerned because your teenager needs braces, and you don't know how you'll pay for it. 

Next, think about your long-term goals. Those are the ones that extend further into your future, such as your children's college tuition and your retirement. Write down your short- and long-term goals so you have a plan to work toward. 

Implement these practical strategies to learn how to stop overspending 

Having a budget is essential, but you might need a few additional pointers to help you succeed. Try these ideas:

Create a waiting period for non-essentials

Have you ever regretted a frivolous purchase? Most people have been there! If you make a rule that requires waiting one to two weeks for small purchases and 30 or 60 days before buying something big, you might avoid some of these purchases. After all, you might realize you don't even want the item after waiting it out. 

Budget smarter

There’s nothing wrong with using a credit card to buy things – as long as you budget for the purchases, and that’s the key. Budgeting well gives you more control over how you spend your money, so start with a good budget and make time to review it each month. Do it as a group activity, and if you have kids, ask them for input. Doing it together while using Greenlight’s educational tools is a great way to teach kids and teens the power of budgeting and saving money. 

Find freedom in minimalism 😊

Minimalism is a philosophy many families are using today to live with less. Some who follow the system of minimalism live with only 100 items! You don't have to go full-blown minimalistic, but you could save a lot of money by incorporating some of its principles. 

Make financial literacy a family event 👪

Focusing on financial education and literacy as a family event can help you learn better money-management principles. It also helps your children develop the tools they need to view money and spending in healthy ways. Greenlight offers educational tools for parents and children, including a blog and an app. It even offers 1% cash back for saving and many other perks.**

Improve your financial health by implementing these tips

Now that you understand the best strategies to stop overspending, you can implement them in your life. Making a few key changes can change your financial future and help your kids and teens learn better money-management skills from the start. Curious to learn more about controlling your spending? Check out the Greenlight blog for more money tips.

**Greenlight + Invest families can earn monthly rewards of 1% per annum, Greenlight Core and Greenlight Select families can earn 2% per annum, Greenlight Max families can earn 3% per annum, and Greenlight Infinity families can earn 5% per annum on an average daily savings balance of up to $5,000 per family. Only Greenlight Max and Infinity families can earn 1% cash back on spending monthly. To qualify, the Primary Account must be in Good Standing and have a verified ACH funding account. See Greenlight Terms of Service for details. Subject to change at any time.

*https://www.credit.com/blog/budgeting-survey