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Hello, my name is Rachel, and I'm a recovering overspender! Nice to meet you! If you know me today, this is probably a huge shock. I mean, I still wear clothes from my high school days (hey, at least some of my overspending didn't go to waste!). While, I'm lucky to have learned the lessons on how to stop overspending younger, I know SO many are still learning the ropes.
In fact, a recent survey found that nearly half (48%) of millennial respondents spent money they didn't have, simply to keep up with their friends (up about 10% from the previous year!). Another article found that millennials average $42,000 in debt, and it isn't from student loans!
Make sure to check out the rest of the posts in the money saving series here.
Today we are going to be switching gears a little bit and talking about how to stop overspending – because honestly, it's pretty hard to reach a savings goal if you're overspending!
Get Honest
Before you can stop your overspending you'll want to look at how you got here so that you never have to come back. First, get really honest about why you are overspending. For me personally, I was young and still learning my worth. I coped with insecurities by “keeping up with the Kardashians” so to speak. Another part of getting honest is identifying your triggers.
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Sometimes it helps to identify your overspending triggers first; especially if you're struggling with figuring out why you're overspending. Personally, I used to love to shop and overspend when drama happened with a friend, I felt publicly embarrassed by something or criticized. Overspending money gave me a false sense of control for my insecurities. Sometimes our reasons for overspending can be bountiful and complicated, so identifying the triggers can be far easier to start the healing process.
Identify your goals and priorities
Getting honest is a great first step, but in setting a strong foundation to stop overspending money you'll also want to get clear on your goals and priorities. These can become your motivating factors when you're tempted to take a step backwards. Knowing that you want to buy a home, save money to have a baby, or get ahead on planning for retirement are all great options to start with. However, with these being longer terms goals, it can be easy to forget them. Instead try coming up with a few short term goals and priorities.
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For instance, a big one for me was that I wanted to stop feeling empty. After I'd spend a bunch of money and the dopamine hit crashed, I'd quickly look at all the stuff and feel nothing, or worse, this emptiness and guilt. I knew there had to be better ways to cope and stop feeling those things.
Motivation has a half life.
Meaning you may start off feeling on fire about kicking your overspending habits, but then the sales start rolling in and your forget all about your five year plan to buy a house. Keeping your goals short and as close to instantly gratifying as possible will help you stay on track. Today, I get the best feeling when I walk through stores and realize I don't have a desire for anything or look in my closet and realize I have everything I want or need. The goal of cutting the emptiness and cultivating gratitude planted a seed that flourishes regularly for me.
Write EVERYTHING you spend money on down!
So yes, tracking your spending helps, but I think tracking your spending doesn't always highlight the true extent of your overspending problem. You see, I can go to the dollar store and spend $20 (especially around the holidays) with ease! Now if I'm just tracking my spending, $20 isn't a huge red flag – however, when I write out a list of every single item purchase for that $20 – while I may do an internal somersault over how much money I saved versus going to Target – I also will quickly realize how much STUFF I just brought in which leads me too…
Watch your plastic [and waste]
Plastic is one of the largest things to be mindful of when overspending. If you want a really simple hack to cut down on overspending, simply decide to cut down on plastic! Don't believe me? Consider this: plastic is literally destroying our environment. It's gotten so bad that many states have started to CHARGE customers .10 to use one of the in-store plastic bags. So right there, if you use a plastic bag at many stores across the country, it's costing you .10 a pop! My state doesn't charge for bags yet, but by making the decision to not use plastic bags, I actually cut down on my purchases because I wouldn't have hands to carry it all out. It was a good system to vet wants vs. needs!
Another example: if you are out and about and get the urge to pick-up a drive-thru iced coffee… guess what they are serving it in? PLASTIC! Oh and remember that dollar store example I just mentioned? Of those 20 items I purchased, guess how many were made with plastic? Yep, all 20!
If you do nothing else other than decide to stop purchasing plastic that ultimately turns to waste quickly, I promise you, you'll cut back on your overspending. Good for your bank account, good for the environment! Watch your plastic also includes your use of your debit and credit cards which leads me to…
Treat your credit card like a debit card
Personally, one of the best things I think I ever did for myself financially was never use a debit card! I know, this is basically the opposite of what most financial bloggers will tell you, but hear me you! By never using a debit card, I always treated my credit card like a debit card with the extra step of paying it off every month. Since I was in the habit of paying it off every month, it never felt like an “extra step” it was just how I got used to using a card in general. This got me in the mindset of never charging what I couldn't pay off that day, meaning I never had to pay interest.
Now, I know not everyone is in this mindset and that's okay. If you had a few missteps or struggles with your credit don't be afraid. In fact, read this post on 4 Reasons To Overcome You Fear Of Credit Cards.
Give every dollar a job
Find a budget that works for you is key. I mentioned the 50/20/30 guideline above, which is an easy 3 number budget, and this tip falls into budgeting as well. Basically whatever budget you go with, the idea here is that every single dollar has a job. Nothing is “miscellaneous” or “wait and see” money. It all gets assigned. Whether that's towards groceries, paying off debt, or saving for your next vacation, every dollar is earmarked. With every dollar accounted for, you won't feel like there's “spare change” you can frivolously overspend with.
Use the 50/20/30 Guideline
I've sung it's praises before and I'll sing them again! The 50/20/30 guideline is a simple three number budget. When it comes to overspending, simplifying is always your friend! Why I love this guideline for overspenders: it quickly showcases what areas to cut back on! If you're grossly overspending on your home, it'll be glaringly disproportionate within this guideline. Or if lifestyle inflation has gotten the best of you, it'll showcase that in black and white. Read more about implementing the 50/20/30 guideline here!
Do a no-spend challenge
It's no secret that I was a chronic overspender in my earlier years! I always earned an allowance and started working at 13 years old! Money was burning a hole in my pocket, mixed with teenage insecurities, I was every salesperson dream! By the time I hit 20 though, I knew something would need to change if I wanted to get ahead in life. I realized my empty spending wasn't filling me up like I wanted so I decided to do a no-spend challenge. What started off as a 30 day experiment led to a 3 year transformation of my relationship to money. Sometimes going cold-turkey is the fastest way to make a change and will make the next step easier. Learn more about doing a no-spend challenge here!
Delay gratification
Since I obviously couldn't buy anything during my no-spend challenge, I learned to delay gratification. What amazed me during the no-spend challenge, was how much I wanted an item in-store, only to completely forget about it until I was back in the store a month later and saw it again. And then wait for it… I had no yearning for it when I revisited it. MIND BLOWN!
Today, I wait a minimum of two days before I decide to buy something. Typically I wait a month though, and if the item is still haunting me after that delayed period, I know it's something I really want and won't just end up collecting dust. In fact, this is why I'm not a fashion blogger. I probably only by about 5-10 new items a year and it takes me about a month to purchase each of them! Heck, even my most recent visor purchase I sat on for a YEAR! And it was only $30!!
Spend money wisely
Obviously if you are trying to stop overspending, the last thing on your mind is probably spending more money. But hear me out: stopping overspending does NOT mean that you are doing a no-spend challenge forever! Nope, it simply means that when you are spending money, you are making wise choices with that money.
One in; one out
Speaking of fashion… another great way to stop from overspending is to implement the one-in-one-out rule. Basically the idea is that for your closet (and maybe even home decor!) you have to get rid of one thing for every item you bring in. This way you only curate things you love, keep clutter down, and also really need to challenge yourself if you love the new item enough to get rid of an old beloved.
Make shopping inconvenient
Now, I love credit cards. This is not the “stop overspending by cutting up your credit card” post! Nope, I fully believe credit cards have a place in our wallets when used appropriately. We all deserve some rewards for spending our money after all! So here's my hack of how I use them: I make them inconvenient! Meaning if I'm going into a store just to browse, like to scope out holiday decor because remember, I'm practicing delayed gratification! I do just that, browse, and leave my credit card at home.
I also never save my credit card to an account while checking out online. Anytime I go to make a purchase online, I either need to get up and find my physical card, or log into my bank account and pull it up there. BONUS: By doing the latter method, it forces me to log into my bank account more frequently and I actually caught some fraud on my credit card the other week. I caught it early enough that the person had only done a few small transactions and it was easy to get cleaned up.
Avoid temptation
One of the first things I did to curb my overspending (or when I notice myself backsliding) is to unsubscribe from ALL store emails. I also avoid touching things when I'm in the store because psychologically we are more likely to perceive ownership when we touch something. It's why car and phone salesmen let you handle the goods; it increases the likelihood you will buy!
For other people, it really helps to only bring the amount of cash out with them that they've budgeted for, and leave their credit cards at home to ensure they stick to their financial goals. This is where knowing your triggers and budgeting system that works for you can become really helpful. Maybe it's a matter of switching up your drive to work everyday so you aren't tempted by your favorite coffee shop as you're trying to make your morning brew at home instead. There are loads of ways to reduce temptations in your life and if you're feeling stuck, review your list of purchases and ask for some help on ways to avoid those stores or limit your spending in them.
A good deal isn't always a good deal
One of my biggest lightbulb moments was when I realized that a good deal isn't really a good deal if I wasn't planning on buying it.
Let me take you back to my early twenties, I just landed my first corporate job and needed to upgrade my wardrobe. I did the whole nine yards: opened up a store credit card, went on a big shopping spree because I had literally nothing, and then started to get hit with all the store emails. I began getting the “limited time: get 50% off today only!” emails… only to realize they were coming literally every other day. It wasn't a sale… it was just their prices disguised as deals! But stores know you are more likely to spend money if you think you're getting a good deal! So get this: saving 50% off something you weren't planning on buying, is still overspending 50%!
If you're only overspending in one or two categories: create a specific system for those
If you are reading this post and thinking to yourself, “great! I've already done all of this, I've curbed most of my overspending, but I'm only really struggling with overspending on food, so this is all kind of a waste” then this tip is for you! This is one I had to cultivate over the years as my spending improved, but I noticed my food budget was kind of all over the place. The more and more financially savvy people I spoke with the consensus was generally the same: spending great, but my food budget, EEEK!
Here's my hack: Use a version of the “envelope system” for this one category. The envelope system is when you put your budgeted amount of cash into an envelope and only spend from that envelope for the month. Once your done, your done.
Now that can feel a little dated for some, so my workaround suggestion: open up a bank account or see if your bank account allows your to earmark funds specifically for this category. If you do choose to open up a bank account, make sure there is no monthly fee associated with it. Just like the envelope system, you'd put your budgeted monthly allowance into that account and spend from that. Once you hit zero, your done. I like the bank account more than the envelope system because you aren't walking around with a wad of cash and you can easily see what's left before making your purchases.
Meal Prep (smartly)
Since we just talked about how food is often the biggest area people overspend in, it's time to reign in the spending! Cooking more meals at home – or even just your daily dose of java – can be a great way to curb overspending. Now, let me be the first to say, learn from my mistakes on this one: do not think you are going to be Martha Stewart overnight. This method of stopping overspending can quickly lead to overspending if you bite off more than you can chew so to speak (#foodpunny ?).
For instance when it comes to food: Don't go out and buy all the fanciest foods thinking you are going to start making the freshest, most restaurant quality food at home to cut back on all your dining out. Nope.
Instead start simple and slow. Decide to make your own coffee at home. Once you have that to a place that brings you joy, decide to start making one meal at home. When you do introduce making a new meal at home (e.g. perfect breakfast before tackling dinner), start with just one new recipe a week. Also, make sure you'll use all the ingredients before they spoil. For instance, if you want to make chicken noodle soup at home, and you only need two carrots for the soup, but you bought a bushel that has five, plan on making a side of carrots for dinner the next night when writing out your grocery list and meal plan for the week. This keeps things from being wasteful or overwhelming. Oh and that's another tip: always shop with a grocery list! People who stick to a grocery list historically spend less.
Find cheaper alternatives
I know I just tackled meal prepping, but keep up with writing down everything you're buying (#3 on this list!) and see what you can create a cheaper alternative for. For instance, if you keep spending money on sandwich bags, consider getting beeswax paper or stasher bags instead. These are reusable solutions that reduce waste and wasteful overspending. If you are a reader, consider the library or buying used instead of buying new books regularly (fun facts about the library: you can download e-books to your e-readers with your library card AND if the library doesn't have a book you want, you can ask them to get it!).
Stopping overspending doesn't mean depriving yourself from the things that bring you joy. It simply means becoming more conscious about how, when, where, and why you are spending your money. Let's be honest, life can feel overwhelming at times and we drop into autopilot on everyday purchases like groceries, clothes, household items, etc. That doesn't mean these are hard or big changes, it just means that we need to switch gears for a bit to find a new autopilot that's more financially responsible. Even better, most financially responsible moves that cut overspending are also more environmentally responsible! So not only are you helping yourself, your helping the planet and future generations to come! If that's not a motivator to jump start kicking your overspending habit, I don't know what is!
Catch up on the Money Saving Series here:
How To Reach Any Savings Goal
How To Save Money For Your First Home Purchase
41 Brilliant [+ Easy] Ways To Save Money On Travel
37 Ways To Save Money When You Have A Baby
How To Save Money This Halloween: 27 Tricks That’ll Feel Like A Treat
The Ultimate List Of 57 Ways To Save Money On Your Wedding
How To Save Money On Groceries Every Month On A Tight Budget
31 Ways To Save Money On All Things Thanksgiving
How To Stop Overspending Money: List Of 17 Tips To Stop Overspending Money Once & For All
Get Honest
Identify your goals and priorities
Write EVERYTHING you spend money on down!
Watch your plastic
Treat your credit card like a debit card
Use the 50/20/30 Guideline
Do a no-spend challenge
Spend money wisely
Delay gratification
One in; one out
Make shopping inconvenient
Give every dollar a job
Avoid temptation
A good deal isn't always a good deal
If you're only overspending in one or two categories: create a specific system for those
Meal Prep (smartly)
Find cheaper alternatives
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