1. Know Your Weaknesses
While you’re gearing up to end overspending, first find out where you spend the most money. Look through your recent statements and highlight any unnecessary expenses. Where are you spending the most on items or services that benefit your finances, or steal from them? Once you’ve recognized your unnecessary expenses, limit your spending.
Bonus step: Create your ideal budget and set specific financial goals using the Mint app. Enable alerts to notify you anytime you’re nearing your budget’s limit.
2. Create a Budget and Stick to It
Now that you’ve identified where you overspend, it’s time to create a budget to keep your temptations at bay. As a general rule of thumb, you should follow the 50/30/20 rule — 50 percent of your income going to necessities, 30 percent towards extras, and 20 percent towards your savings.
After figuring out how much money comes in versus out, set your monthly budget goals. As each month may have different expenses, plan for the adjustments. Sit down at the end of each month to readjust your budget for the next month ahead.
Bonus step: Schedule budget check-ins once a month to hold yourself accountable.
3. Give Every Dollar a Purpose
When creating your budget, try budgeting to zero. When you have extra money laying around in your account, you may feel tempted to spend it on things you don’t need. Once you’ve accounted for your necessary expenses like rent, electricity, and WiFi, divide up your leftovers to put towards your savings, extra debt payments, and investments until you reach zero.
Bonus step: Set up automatic savings contributions to make sure your income is directly deposited where you want it to go.
4. Only Shop With a List
Write out a shopping list before you enter the store to ensure you get everything you need without any extras. While you’re shopping, only stick to what’s on your list. If it’s not on the list and you haven’t budgeted for it, put it down and just keep walking.
Bonus step: To avoid impulse purchases, unsubscribe from all your email newsletters and delete shopping apps from your phone.
5. Check Your Budget Before You Spend
If you do find yourself eyeing an item that you haven’t budgeted for (it happens!), check in on your bank account before making the purchase. If it fits your budget, ask yourself the hard questions. Do you really need this item? If so, how would it benefit you and your lifestyle? Could it save you time or money? If yes, follow through with the purchase while respecting your budget.
Bonus step: Wait three days before purchasing an unneeded item. After 72 hours, if you’re still interested and it fits your budget, go back and get it.
6. Invest In Multi-Use Products
While your monthly goal may be to save as much as you can, be open to higher-priced items that could help you reach that goal. For example, buying reusable paper towels means you’ll spend less on disposable ones over time. Another way to save on small expenses is to become your own barista, which can save you between $1,934 to $2,327 a year.
Bonus step: Consider adopting some minimalist lifestyle ideas to help spend less and declutter.
7. Ditch Food Delivery and Cook at Home
The average American spends $3,459 on eating out every year. Instead of ordering food for lunch every day, meal prep at home. You can work this into your weekly routine by designating a day for meal planning and a day for grocery shopping and cooking. Planning your meals saves you from overspending while still making your favorite gourmet meals. You can save eating out for special occasions.
Bonus step: Delete all your food delivery apps from your phone to avoid the urge to order a speedy, but expensive, meal.
8. Pack Leftovers the Night Before
When your calendar’s booked, you’re most likely looking for the easiest way to get food for lunch. Nix your takeout food budget and pack your leftovers from the night before. While some nights you may be booked with events or virtual get-togethers, meal prep once or twice a week to ensure you have food for lunch every day. Simple dishes like chicken and veggies are easy meals to make on a budget.
Bonus step: Organize a “lunch swap” with your coworker so you don’t get bored of eating the same meal.
9. Squash Sale Shopping
If items on your shopping list aren’t on sale, don’t go looking for unnecessary items on the sale racks. You may walk out of the store buying something you don’t need because “it was only five bucks!” Kick discount shopping to the curb unless the items you need are part of the sale.
Bonus step: Save time and money by avoiding discount catalogs and sale sections.
10. Opt For Generic Over Name Brand
While checking off your shopping list, see if there are any generic alternatives to big-name brands. Most big box stores make the same products at a discounted price in exchange for the branded packaging. Compare the ingredients of a generic item against name brand products to see if you can spot a difference. Purchasing generic food products alone could save you 30 to 60 percent.
Bonus step: Google online coupons at checkout to see if you can get an added discount.
11. Cancel Unnecessary Subscriptions
While your gym membership and TV streaming system may have served you a few years ago, it may not now. Audit your expenses each month to see what you’re able to cut out. Instead of paying for a gym membership that costs on average $696 each year, purchase weights and a yoga mat for your own home gym. Not only could it save you money year after year, it could save you the commute to the gym and back.
Bonus step: As 65% of people don’t keep track of their monthly spending, schedule budget audits on your calendar every three months.
12. Challenge Yourself to a No-Spend Challenge
Participate in daily, weekly, or monthly savings challenges to make penny-pinching more fun. Ask your friends and family to join in on a no-spend challenge to up the stakes. Spark some friendly competition while giving back to your bank account. Once the month has come to a wrap, treat yourself to your favorite snack in celebration of your achievements.
Bonus step: Set an alert on your phone for a no-spend day each week. One New Yorker saved $18,432 in six months from having one no-spend day a week.
13. Set New Budget Goals and Repeat
Challenges help keep your eyes on the prize. Set different goals as you audit your budget each month. One month you may want to focus on contributing to your emergency fund, while the other you may want to increase your student loan payments. Get creative with your goals and set up budget alerts to ensure you’re meeting them.
Have you ever started off the month with the best of intentions to save money – buying only what you need, steering clear of the sales displays, and trying to watch your spending? And then, despite your best efforts, it just seems to happen. Before you know it, you’ve spent more money than you wanted to. Don’t beat yourself up, it happens to many of us, so before you get your next credit card statement and wonder how to stop spending money, read on for some of the best tips around!
There are many reasons why we overspend. It could be because we aren’t aware of our true spending habits. Maybe we are guestimating our income, expenses, debt payments and spending incorrectly. Then in the end our bank account balance dips lower than what we expect. Whatever the reason, if you’re ready to take control of your finances, these seven tips will help you keep your spending in check.
1. Understand Your Spending Triggers
In many cases, knowing how to stop spending money has to do with identifying the emotional and psychological triggers that cause us to spend. If you remove those triggers, you’ll remove the temptation and opportunity to overspend. So the next time you head out the door, keep these in mind:
Time of Day
Do you find that you have more energy during certain periods of the day? If so, shop during times when you have more energy and feel less stressed. You’ll make wiser spending choices and think more rationally when you’re relaxed and less pressured.
Are there certain environments that make you want to spend, or make you feel obligated to spend just because you’re there? Craft fairs, shopping malls, home shows, and even when you’re on holidays are all prime examples of times when you’re more likely to spend impulsively. So, take away the temptation by either steering clear of such environments, or only taking a few dollars with you.
Likewise, if you have a favorite store and you find yourself wandering through the aisles looking for great deals, do all you can to limit your opportunities to go there. If going to your favorite store is unavoidable, keep your money – and credit cards — safe from yourself (see more about this later).
Different moods and emotional states can alter our energy resources, making us more prone to impulse shopping. For example, if we’re upset, stressed, or anxious we may seek some retail therapy to feel better. But instead of hitting the mall or your favorite internet shopping site, hit the gym or the park. Going for a walk or doing some exercise will do wonders for lifting up your mood. Other moods can tint your shopping with rose-colored glasses, and everything begins to look like a great deal.
What’s important is that you identify the moods that affect your spending behavior, and find ways to avoid shopping during moods that will cause you to impulse buy.
Man Feels Pressure to Spend MoneyDo you tend to spend more money than you normally would when you’re hanging out with your friends? Even the most well-intentioned friends can be a bad influence on us, especially if they have bad spending habits themselves. If you can’t afford to eat, shop, and vacation the way your friends do, it’s okay to decline their invites.
Instead, suggest plans that won’t require you to shell out a lot of money. Meeting for coffee instead of brunch, exploring new hiking trails instead of checking out the latest concert, or having a potluck dinner at home instead of going out to a restaurant are a few money-saving tips worth considering. You won’t be able to splurge on expensive vacations or fancy dinners, but you can still enjoy a fun social life without shelling out a lot of money.
Don’t be scared to let your friends know that you’re trying to spend less; perhaps they’ll help you on your journey, and some may even follow suit! What’s important is that you surround yourself with friends who will support you as you work toward your financial goals.
If you’re accustomed to a certain lifestyle, it could be difficult to give up when you suddenly encounter financial hardship. But, if your lifestyle ends up becoming bigger than your budget and you don’t know how to stop overspending your budget, you could end up in worse shape.
Your upbringing also has an effect on your lifestyle choices. If you grew up in a household where money was always tight, you may feel the urge to overspend to compensate for all the things you were deprived of growing up. Similarly, if you grew up in a household where money wasn’t an issue, you may feel compelled to spend money you don’t have in order to maintain the lifestyle you grew up with.
The easiest way to start living within your means is to create a budget and stick to it. You may have to sacrifice some creature comforts, but it will be worth it when you see your bank balance coming out of the red.
2. Track Your Spending
The littlest purchases can really add up, and by the time the end of the month rolls around, we can be facing a dwindling bank account and severe buyer’s remorse. Tracking your expenses is the key to successful budgeting because it keeps you accountable for every dollar you’re spending. Once you’re aware of where your money is going, you’ll be in a better position to make smarter spending choices and to identify areas you can cut back in.
Many consumers start by tracking the bigger expenses, but it’s just as important to pay attention to those small, daily purchases. A morning latte, those lunches out, picking up a lottery ticket, or grabbing a magazine from the grocery checkout line can add up more than you think they would, and they can affect our budget in big ways.
If you can cut down as little as $4.00 a day, which is equivalent to your morning latte or your breakfast bagel sandwich, it’ll add up to over $100 a month!
3. Stick to Cash and Stop Relying on Credit Cards
It’s more convenient to whip out a credit card to pay for a purchase than it is to count out a wad of bills, but this convenience is one of the reasons behind many people’s overspending. The downside of credit cards is the ease with which you can overspend; when we’re nonchalantly handing over our card to make a purchase, we’re often not aware of how much everything will add up at the end of the month.
With cash, you physically see how much you have, and how much of your funds are diminishing with each purchase. By paying only in cash, you’re forcing yourself to only spend what you have. So, give your credit cards a break and try to stick to a cash-based system to see if it will curb your spending habits. Based on your budget, take out some cash at the start of the week and put it in an envelope, which will act as your ATM for the week. Draw out a few bills here and there to cover your purchases, and if you find yourself running low on cash, you’ll have to figure out a way to make your money stretch.
By paying with cash, you’ll learn how to stop relying on credit and you’ll know how to stop spending money you don’t have. The cash envelope system will also encourage you to become more creative and resourceful. If you overspend and you don’t have enough to go out to dinner with your friends, you’ll have to figure out different ways of saving money or think of budget-friendly ways to spend time with your friends.