Overspending? 7 helpful tips to curb your spending habits
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Let’s face it — spending money is a necessary part of life (and can be fun!). But spending too much can prevent you from meeting your financial goals and lead to bigger issues over time. The key is learning to spend money wisely and finding ways to avoid overspending. Here are seven practical tips to help you keep your spending in check.
1. Understand why overspending happens
Overspending usually means buying things you don't need or didn’t plan to buy. Some call it 'living beyond your means,' and it happens for a variety of reasons. It can stem from boredom, emotional stress, or even just a lack of awareness. Pinpointing the “why” behind overspending is key to kicking the habit.
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2. Learn your spending 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 to 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.
3. Create a realistic budget
A remarkable 27% of Americans say they don’t need a budget! However, budgeting is a crucial tool for managing your finances, helping you track where your money goes and identify areas where you might be overspending.
Start by listing your income.
Next, plot out your expenses and savings.
Then, create a basic budget template. For example, many families use the 50/30/20 rule: Allocate 50% of your income to needs, 30% to wants, and 20% to savings.
4. Set clear financial goals
Budgets are easier to follow when you know what you’re working toward. What are some short-term (this year) goals you want to achieve? Maybe you need to pay off that credit card or budget for braces. You also need to budget for longer-term goals, like college tuition or retirement.
5. Try a waiting period before buying
We’ve all regretted a frivolous purchase here and there. Test yourself with a few before-you-buy rules. You might realize you didn’t really even want those things.
For smaller “nice to have” purchases, wait 1-2 weeks.
Wait 30-60 days before making larger purchases, such as furniture, electronics, or other significant expenses.
6. Embrace simpler living
Minimalism is a philosophy that many families adopt to live with less - sometimes limiting themselves to a total of 100 items. But you don’t have to go to extremes. You can save a lot of money by incorporating basic principles. Each choice to scale down keeps more money in your pocket.
7. Make financial literacy a family event
Learn practical money-management principles together, whether it’s a monthly budgeting check-in or taking a family class. Making it a regular practice helps kids develop the tools to view money and spending in healthy ways.
A few strategic changes can significantly impact your financial future and help your kids and teens develop better money-management skills from the start.
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