Almost everyone loves getting new clothes, gizmos or eating out. But there are two kinds of people sitting on the extremes. One who would like to acquire all these but have someone pay for it, as they are not keen on parting with their money and the second type is just the opposite. This type just can’t let the money stay in their wallet or the bank account.
What are the tell tale signs of spending too much money
- Do you often spend your pocket money or paycheck as soon as you get it?
- Do you go on spending until you are left with no money?
- Do you regularly need to borrow money from your spouse, parents, siblings or friends?
- Do you struggle to pay your credit card bills and often make part payment?
If your answer to any of the above questions is yes, then you should read this blog several times to help you control your over spending habits!
Is over spending a big problem
Of course, it could become a big problem. if this habit goes unchecked for a long time then it can put the person on a debt trap. The matters can go worse if the person’s income is well below his spending and on the top of it he has to service the debt. Such a person is driving himself to the stage of bankruptcy.
While we all like to go overboard sometime or the other but if it is done on a regular basis then it needs to be controlled and stopped with conscious efforts. This should be taken seriously as you are spending more than you earn
But don’t let this you scare you as the tips given here shall help you curb money over spending habits.
How to control spending too much money
Step 1: Change your approach
Yes, it is as simple as that. A journey of thousand miles starts with a single step. Once you accept and recognize that there is a problem of spending more money than you earn, you can then begin to correct it.
Step 2: Make a goal to save money and announce it
Begin by deciding that you will save a particular amount in the next 3 months through a regular cut on your spending too much money. Alternatively, it could be a certain percentage of your income or allowance. For example, if you make 1000 Dollars per week, then you may like to fix a goal of saving 10% of your earnings in the next 6 months. This would be $ 2400 !
Make a promise to yourself, your parents and your family that you will save some money by controlling overspending. Keep reminding yourself of the promise and the saving target
Step 3: Plan your budget
To help you stick to the promise, you will actually have to be smarter than before in your spending. While you may want your basic needs to be fulfilled you do not want to spend unnecessarily. Thus the best way out would be to make a list of the things you may need for the next 15 days (or you may do it for a month). Against each item, write down the price and total it up. Remember that your monthly expenses should be well below $3600 (continuing with the previous example) as you may have some unplanned expenses or there could be some contingencies.
It is quite possible that initially you may overshoot the budgeted amount but keep revising it by striking out the unnecessary items or the purchase of items which can be postponed until you reach the desired figure.
Before you begin to celebrate, wait! Even now you may have forgotten to include certain items and you still have to produce the results. For this you have to go to the next step.
Step 4: Buy wisely
The compulsive shoppers buy a lot of stuff which they never get to use. I was recently watching a TV program where a team from the TV channel office actually went to the house of a few people and checked the food items in the refrigerator. To the utter surprise of everyone, it was found that there were extra items, duplicate shopping and eventually they will reach the expiry date not to be consumed ever.
Similarly ask yourself that do you actually need the sixth white shirt or eight black leather belt or can the purchase of new mobile phone wait?
Step 5: Don’t buy when you are emotional
A lot of people can’t resist buying something when they get emotional. This is not to say that you should not reward yourself for a good achievement or not celebrate success. But psychologists say that compulsive buying is also triggered as a response to the emotional problem which could be in the form of fear, guilt, shame, anxiety, anger, depression doubt or feelings of inadequacy, or some other emotional matter. You should learn to identify what emotion or circumstance triggers an urge to buy and put a conscious stop to it. If you cant handle it yourself you may take the help of a professional therapist or a counselor.
Step 6: Don’t carry all the money with you
Some people have the habit of carrying maximum amount of cash in their wallet while some like to carry dozens of credit and debit card. If you are a compulsive shopper with a minimalistic habit of saving and investing, then this is like giving a signal to yourself that all this money is readily available for spending. The best way would be carry only a small amount ( which you must) and it should be should be sufficient to pay for a taxi , make a few phone calls or buy you a basic lunch. The same goes for the credit cards.
Put the rest of the money away, preferably in the bank. If that seems unreasonable for you, put part of it away in the bank and the other part in a safe place and make sure you don’t spend it.
Step 7: Pay in cash
Research has proven that typically it is easier for people to spend when they pay with credit card or debit card, often resulting in over spending or buying extra. When you don’t pay in cash you do not feel cash going out of your hands, because a plastic card does not look like a wad of currency notes.
Therefore, to generate actual feeling of parting with money, it is recommended that you make the payment in cash. Take out the wallet or the purse from your pocket or your handbag, pull out the dollars, count them carefully and then pay to the cashier. This way you will feel more connected to your money. You are much less likely to go on a compulsive spending binge because you already have decided to carry a limited amount of money and parting with money will make you think before spending.
Step 8: Begin to invest money
Most of the rich people you see or even know personally became rich by investing wisely and their fortunes rose steadily over a period of time. You too can idealize and follow people like Warren Buffett. Of course, you will have to begin small but that is OK. This will have two benefits. One you will get busy in a productive habit and it will take your mind off spending money. Second when you see your investments growing and multiplying, there will be motivation to do even better.
Don’t let your savings sit idle in your savings bank account. Invest in judiciously in two or three financial instruments and don’t put all your eggs in one basket. Also don’t buy too many financial investment products in one shot, instead learn about them and then proceed carefully.
Step 9: Keep a track of your earnings, spending and investments
Keep a record of what you are earnings and against that what you are buying and the expenses you are paying for. The third and fourth major heading should be the savings and investments.
This shall help make you more aware of what you’re spending and kind of spending. It is quite possible that the analysis of a month’s records may show that a few of your purchases were not wise or could have been at a better price. A purchase diary can raise your awareness so that you can stop and think about it. Of course, be honest as ‘cheating’ your purchase diary will not help you for your long-term saving.
Step 10: Motivate yourself
There are many ways to think positively about your future and motivate yourself to save and invest. For example, you can have a vision of a debt free and a happy person who is enjoying financial freedom as a millionaire. You may like to refer to:
Step 10: Stay vigilant
Habits die hard. Even if you have come a long way until now – hopefully following first 9 steps to control spending too much money, the old behavior patterns have the habit of coming back like the rubber band, especially when the person lowers the guard.
Therefore, the success has to be maintained by being vigilant always.
Remind yourself that this has to be a lifelong habit. You may also think of retiring as a rich person, who continues to afford and enjoy all the good things of life even after retirement. Please see How to Retire a Wealthy Person
Step 11: Help others too
Once you’ve learned how to be good at saving and investing rather than merely spending, pass this on. Do help others you see spending indifferently and brighten their lives.
You may wonder that how it is connected with your controlling the money spending others. Well there is a link. You can’t be a good financial or investment adviser to others unless you have learnt it well yourself and practice it successfully.
Helping others will continue to reinforce these steps on you as well – regularly and you will only get better.
Your views please
Did you find this interesting and useful? Then do share your views also for the benefit of other readers!