Overspending is a rampant issue many of us face. Almost half of Americans say that their expenses are greater than or equal to their total income. For consumers aged 18 to 25, the proportion jumps up to 54%.
Having control of your expenses is key to reaching your financial goals like saving for a home or retirement, boosting your credit score, or even lowering your money stress. Staying within your proposed budget will not always be easy. Most of the time, impulsive or emotionally driven spending causes problems, but you can always get back on track.
Common Causes Of Overspending
Below are common causes of overspending you should be aware of:
Easy Access to Credit
It’s very easy to get mortgages, credit cards, refinancing, and auto loans offers. Filling out a form or clicking on a lender’s website is all it takes to take out new credit. It almost feels like free money.
Easy Access to Cash
With the existing technology, most people can access their bank account 24/7. However, this can be risky when it comes to your spending habits. Relying on keeping enough funds can sometimes lead to impulse spending.
Giving in to Temptation
A friend or co-worker might invite you out to eat, do some shopping, or travel to exciting tourist destinations. It’s necessarily not bad, but it’s vital to ensure that it’s in your best financial interest. You don’t want to spend money and regret it afterward.
Stop Overspending By Following These Tips
The following are simple tips you can consider to avoid overspending and start saving more money for essential matters:
Create a Budget and Keep Track of Your Spending
You won’t have any idea how to control your spending until you are fully aware of your finances. Start by taking an inventory of your expenses for a month. Collect your latest debit and credit card statements and all of the receipts you have for cash transactions.
You can use a pen and paper, a money-tracking app, or a spreadsheet to track your spending. Divide your expenses into several categories- utilities, groceries, housing, clothing, dining out, car, savings, and others that make sense to you. Sum up each column and look at how much you spent.
When you already have a budget, you can use your expenses inventory to compare and see where you are spending more than you should. However, if you don’t have an existing budget yet, you can use the tracked expenses to create a one.
Lower Your Credit Card Spending
It’s recommended that your monthly income and expenses be balanced without using credit cards. It’s because large amounts of credit card debt can be very challenging to pay off. Plus, the interest charges build on the monthly credit card payments. So, it will help if you stop overspending and lower debt.
If you think that impulse buying is taking a toll on your finances, you might want to avoid carrying your credit cards everywhere you go or storing your credit card information in your web browser. Doing so can provide you ample time to decide the unnecessary expense is not the best idea.
Reduce Your Monthly Bills
Bills such as mortgage or rent payments, phone plans, or utilities make up a massive chunk of your monthly outflow. That is why they are an excellent place to economize. The following are some ways to reduce your monthly bills:
- Utilities: It’s recommended to cut some energy consumption to save more money. You can do this by using appliances that consume less power, setting the thermostat lower, and turning the lights off.
- Phone and Internet charges: Is it possible for you to lower your service level without suffering? Can you get another plan for a lesser payment?
- Credit Cards: Research your auto or home policy to see if you can be eligible for a better rate. You might qualify for a multi-policy discount if you have more than one policy with the same carrier.
- Insurance: Reduce your monthly payments by paying off your debts and resisting the urge to purchase. You can also consider debt consolidation to lower your monthly bills.
Review Memberships And Subscriptions
Subscriptions and memberships are easy to sign up for, and it can even be easier to forget about their payments. Look through your phone, credit, and debit card bills for any recurring subscriptions and cancel if you don’t use or need them anymore.
To Wrap It Up
Spending money on things you enjoy is not a bad thing. However, it can affect your finances if you do it too much. Lowering your expenses and saving more money can help you get back on track to reaching your financial goals.