Money Saving Tip: Understand the Roots of Your Overspending Habit
If You’re in Need of Strategies to Spend Less Money, Start with Gaining Clarity on Why You BuyKathy Longo, CFP®, CAP®, CDFA® Tuesday, 12 April 2022
Are you looking for strategies to curb your overspending habit? So often, we have the best of intentions when it comes to our money goals – including our spending. We might start the month resolving to stop unnecessary spending, only to be wooed by an unexpected sale here, and a fancy coffee there. Before we know it, we’ve spent more money than we wanted to and we end the month beating ourselves up again.
If this sounds like you, don’t despair! Instead, get to the root of your overspending habit so you can begin to make a change.
Why Are You Overspending?
Before you can truly address your tendency to spend too much money, it’s important to understand the reasons why people overspend in the first place. Sometimes, it’s the simple fact that you aren’t aware of your true spending habits. Or maybe it’s that you’ve been guesstimating your budget incorrectly. Most often, however, it’s emotional and psychological triggers that lead to purchases we later regret.
We’re all human and we can’t hold ourselves to unrealistic expectations when it comes to our budgets, but doing your best to remove these triggers can also remove the temptation and/or opportunity to overspend. So, here are a few things to keep in mind as you work to get to the roots of your overspending:
Time of Day
Have you noticed that you feel more energetic or less stressed at certain points in the day? If so, these are times when you’re also more likely to make wise spending choices, so try to limit your in-person or online shopping to these times. You’ll think more rationally and be less affected by stress and pressure, which can lead to impulse spending.
Do you feel obligated to spend at a local craft fair? Are you unable to leave a shopping mall without making at least one purchase? Do you allow yourself free reign to spend when you’re on vacation? We all have certain environments where we are more like to spend impulsively, so it’s important to identify when it’s best for you to steer clear or only take cash with you and stick to a predetermined budget.
If you’ve ever practiced “retail therapy” then you know that your emotional state can make you more prone to impulse shopping, or to using shopping as a panacea for stress, sadness, overwhelm, and many other emotions. Make a plan to substitute shopping for a healthier activity – like taking a walk or practicing mindfulness meditation – next time you feel the urge. Exercise produces endorphins that can work wonders on your mood – and for your bank account, too.
We all have at least one “spendy” friend! You know the type – that friend who encourages eating out, shopping recreationally, or taking pricey vacations. Even the most wonderful people can be bad influences on us if we tend to spend more money than we normally would when we’re with them, so know that you have permission to decline their invitations. You can also suggest plans that won’t require you to spend much, like meeting for coffee instead of brunch or checking out a new hiking trail instead of purchasing pricey concert tickets.
Sometimes, simply mentioning that you’re trying to curb your overspending helps. Our friends can be a great support system for our financial goals. Check out my Flourish Financially podcast, Episode 47: Why Friends and Finances DO Mix, for more on this!
Our upbringing has a lot to do with our relationship with money. If you grew up in a home where money was tight, you might spend too much now as a way to make up for what you felt deprived of. Conversely, if your family always had plenty of recreational money, you might feel compelled to spend too much in an effort to maintain the lifestyle you grew accustomed to.
Another aspect to consider is the comparison trap many of us get caught in – most often due to social media. One of the biggest issues with “keeping up with the Joneses” is that, suddenly, our lifestyles become bigger than our budgets. It might seem like everyone on Instagram or in your neighborhood is driving a brand-new SUV, but remember that you never know someone else’s financial situation. They might be insignificant debt, but no one posts about that on Facebook or Instagram! So, don’t let someone else’s financial decisions lead you to make poor ones for yourself.
The First Step to Stop Overspending
Taking the time to understand the roots of your overspending is time well spent. Without clarity on why you’re spending too much, you can’t truly make a plan to change.
How does that plan begin? Well, if you don’t have a budget in place – and a strategy for sticking to it – this is where you should start. Creating a realistic budget and setting intentions for meeting it each month is the easiest way to begin living within your means and to stop frivolous or unnecessary spending. Will your budget require you to give up some creature comforts sometimes? Probably. Will it also stop you from overspending and allow you to save more money? Absolutely.
The U.S. Consumer Financial Protection Bureau offers an excellent resource for getting started with a budget you can stick to in four steps.
More Strategies to Spend Less Money
It takes both knowledge and dedication to stop overspending, and there are many helpful strategies you can use to meet your goals in this area of personal finance. Now that you have more insight into discovering your reasons for overspending, my next blog will focus on six ways you can tackle this bad habit and start making smarter spending decisions.
Want more content now? Here are a few more of my Flourish Financially Podcast episodes that you may find useful to understand your relationship with money and spending:
Catch new episodes of Flourish Financially every Wednesday on Apple Podcasts or your favorite podcast provider!
About the Author
Kathy Longo brings over 25 years of expertise and experience to Flourish Wealth Management. Kathy is wholly dedicated to improving the life of each client and finds joy in making complex matters simple and easy to understand. She excels at asking the right questions, uncovering new possibilities and implementing the most advantageous strategies for success. Playing such a pivotal role in her clients’ lives remains an honor and a privilege. After earning a degree in Financial Planning and Counseling from Purdue University, she began her career at a small firm in Palatine, Illinois where she worked directly with clients while learning to build a viable, client-centric business. Over the years, she gained extensive knowledge and wisdom working as a wealth manager, financial planner, firm manager and business owner at notable, various sized companies in both Chicago and Minneapolis.