Career Advice Professional Development

How to Stop Overspending

Erin Davis
By: Erin Davis
Oct 9, 2020 • 7 min read

How to Stop Overspending

This has been a problem for everyone at some point in time. Overspending is easy, and it can be very fun. We see so many ads every day and convenient options for ordering and delivery, so it is clear that everyone has plenty of opportunities to overspend on things that make life convenient. Although this is entertaining and helpful, it is also a hazard when it comes to your budget. Budgeting is important because it helps people set goals for larger purchases and save in case of emergencies. Long term goals can’t be accomplished without short term goals, and those short-term goals need a start somewhere! Going out to eat every night is fun and easy, but it is not the key to financial success. Quitting these habits can be a struggle, but these are some simple steps to help everyone stop overspending. 

stop overspending

Start a spreadsheet

Spreadsheets are not just for finance and accounting majors! Anyone can make a spreadsheet to simply total your finances. Keeping track of the money coming in and out, and on which purchases you are spending a lot of money on, can help realize where the money is going. Start a living spreadsheet on a laptop, with one column for prices and one for item categories. These categories can include groceries, dining, coffee, rent, electricity, cable, etc. Labeling expenses in this way can help to identify what is a necessity and what is not. As the spreadsheet goes on, try utilizing different sheets for different weeks and one final sheet for the monthly finances. This can change for everyone, but it is a basic start to tracking finances.

Add up expenses

The next step is to add up these expenses. Sometimes this can be a scary sight to see, especially if you are overspending and not watching the mobile bank app at all times. This shock factor can be what you need to stop overspending. If you know how much you are spending now, you can eliminate all of the non-necessary items and expenses. Your essential bills and food should be the basis of this budget.  Making a budget should be a weekly task for most people, so it is simple to keep track of, although some people may find bi-weekly is easier. 

stop overspending

Break down variable spending

Variable spending is the exciting part, but it is also the aspect of budgeting that has gotten too crazy in the past. This budget can be used to eat, shop, and buy any extra purchases. These numbers should be lower than your essential purchases in the spreadsheet, but don’t make it unreasonable. Saving can be gradual, and it is key to remember that you don’t need to save your entire paycheck. After this is added to the budget, you have your ideal number for weekly or biweekly spending to keep in mind as you add up your weekly expenditures. Variable spending is the hardest part to control, but keep in mind why saving is important, to begin with.

Switch to cash

For some people, debit and credit cards can be the problem leading to overspending. If the credit card bill is more than you make in a month, there is a problem. Paying off your credit card each month will help you to build strong credit. To move away from going over the top with these cards, try working off of cash. This way, you will always know and see how much you are paying and know what you have left. At the beginning of each week, take your variable spending money out in cash and begin to leave the cards at home. Of course, it is smart to keep a card with you in case of emergencies, but for the most part, the cash will help keep the budget on track.

stop overspending

Zero your accounts

If carrying cash is not your favorite way of keeping track of finances, maybe it is time to get a new bank account. Start zeroing your accounts. Not totally, but just one account. If the checking account is only used for bills and extra spending, try only putting the budgeted money into the account. Another option is to have the basic bills pull from a larger account and get a new checking account for extra spending. This way, when the money is gone, you will know you have spent it all. It also allows you to transfer money between accounts if needed.

Make short-term goals

Of course, there has to be some goal to motivate you to stick to this savings plan. However, this can’t be a goal five years down the road. If you plan to save for a house, that is great, but you should break that larger goal into short-term goals, it can help to track your progress. Saving a thousand dollars a month will add to the larger goal of saving for a down payment. This way, you can either make the goal or miss the goal each month, instead of realizing you did not make progress at the end of the year. Budgets are adjustable, and this is also a great way to know if your budget needs to be changed. Sometimes expenses are forgotten or underestimated in the original plan, and short-term goals will need to be adjusted.

stop overspending

Reward yourself

Perhaps the most important part of not overspending is to be sure you are rewarding yourself! This will help with the overall motivation of budgeting, but is also the best form of self-care. Everyone deserves to be rewarded for your accomplishments, so don’t be afraid to break the budget every once in a while. Life is about balance, and maybe the end goal is a reward enough to keep going!

What are your personal tips and tricks to avoid overspending? Let us know on our social media accounts!

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