One of the easiest mistakes to make with money is overspending. It happens to all of us occasionally. Yet if overspending becomes a habit, that’s when you know you have a real problem on your hands. What can help is a two-pronged effort: Understanding why you overspend and then making practical changes to stop the behavior.
Why People Overspend
Money is (mostly) a physical thing. But there is emotion and psychology behind it as well. When you overspend habitually, the first thing to do is try and understand why that is. Some of the more common overspending mindsets include lifestyle creep, keeping up with the Jones’, failing to make plans, and reacting to outside forces. Let’s break each down:
Lifestyle creep. This is when you spend more as you make more, eventually going over the top to overspending.
Keeping up with the Jones’. This is the impulse to have what friends, loved ones, and others have, despite perhaps not having the funds to do so.
Failing to plan. This is simple: You don’t have a plan for your money, making it easy to lose track.
Reacting to outside forces. This is when you overspend because of marketing and advertising.
How to Stop Overspending
The best way to stop overspending in practical terms is to make small changes that add up over time.
- Start making a list when you go shopping.
- Create/revise your budget so that it is constantly up to date.
- Try to put barriers in place that stop you from making purchases simply because of a good ad (like removing credit cards from your phone and computer).
- Create a specific savings plan.
- Make small practical changes that address the overspending mindsets you have and you’ll make progress sooner rather than later.