How to Stop Overspending
If you want to learn how to stop overspending, then this article is for you!
It’s so easy these days to overspend. It’s so easy even to spend more than we earn. There are so many things to buy—so many pretty, shiny, or techy things to fill our homes. And credit is so easy to get these days—credit card maxed out? No worries—just get another one.
But that’s not a sustainable way to live. And it’s a precarious way to live—a scary way to live. And that is because at some point, all that money that you spent before you earned it has to be paid back. And the interest you paid to buy those boots or that phone or that SUV before you could pay for it cost you. They cost you peace of mind, they cost you financial security, and if you don’t turn things around, they cost you long-term prosperity. It’s just not worth it to go into debt and rob your future self of financial stability and comfort and even wealth. And that really is the price that you are paying.
But you can turn things around, and it’s actually pretty simple to do. It’s not necessarily easy, but the steps are pretty simple. And once you have a strong enough reason to stop overspending, it actually can become pretty easy, as well. Here are 15 tips to help you stop overspending, get control of your money, and change your financial future. Your future’s gonna be awesome, if you’ll just follow these suggestions and the other guiding principles I share on this website.
1. Know your financial why (so important!).
W-h-y. Those three letters are incredibly powerful. Understanding your financial why may be your most powerful tool for curbing your overspending, and that’s why we’re talking about it first. Because in order to change old habits and start new, better habits, we’ve got to have a very strong motivation—and that motivation, for many people, is their why. To learn more about the power of why, I highly recommend the book Start with Why, by Simon Sinek. It is (and all of his books are) an excellent read.
In order to be effective, your why has to be powerful—more powerful than your urge to buy stuff or do things you can’t really afford—or better put, that jeopardize your long-term financial stability or goals. Maybe your why is to have financial security, have one parent be able to stay home with your children, be financially independent early on in life, live in comfort (or luxury) in retirement, be able to give very generously to worthy causes, be an awesome financial example to your kids, or be able to retire early to travel, volunteer, or spend time with your children and grandchildren.
For me, my financial whys are very strong motivators. My current financial goal is to be able to get this blog to the point where it can replace my full-time income so that I can be home all day with our three little cherubs. Even though I love my current job, being able to be home with our children and work for myself is something I want even more, and so I’m willing (very willing, really) to make sacrifices (of sleep, mostly, and “me” time) to make that hope and dream a reality. And then they aren’t really sacrifices at all—just choices to be made.
When your motivators are strong enough, you will choose to stop overspending and to get control of your money. And I’m here to help you every step of the way.
2. Learn to be content.
One of my favorite scriptures from the Bible is this one where Paul is speaking to the Philippians and says to them, “I am not saying this because I am in need, for I have learned to be content whatever the circumstances” (Philippians 4:11).
Another important step in the behavior shift to stop overspending is to learn to be truly content with what you have and where you are in life. Now, that doesn’t mean that you give up all worthy ambitions and never try to improve your situation or attain more in life. Of course not. Rather, it means that you be happy with things as they are, while you continually seek for the things and to improve in the ways that truly matter. One important part of that is to understand that, unless you’re living in true poverty, you already have enough. You already have the necessities of life—adequate food, clothing, shelter, transportation, and utilities. And undoubtedly you have much of what you want, as well.
When striving to change the way we think in order to be content with what we have, it helps to remember the hedonic treadmill. What this phrase means, in terms of our money and possessions, is that the more we buy—the more we acquire—the more we’ll likely want. Pretty soon, that shiny thing we bought last month isn’t shiny enough anymore. The new dress just isn’t cute enough. The new ATV or car or truck has lost much of its luster. The way to reverse this potentially neverending spiral is to think about what’s truly important to you (probably your family, your friends, your health, your relationship with God or a higher power, your love of nature—intangible things like that), and to say that enough is enough. You don’t need any more stuff. Instead, work to simplify your life, strengthen your relationships, improve your health, declutter your home, and be mindful with your spending.
And then, when you’re no longer spending all of your money (and then some) on shiny stuff, you can get your money under control and start using it for things of more long-term importance like financial security, independence, your children’s college educations, a comfortable retirement, generous giving, and more.
3. Stop worrying about what other people think.
One way to ensure you can be content with what you have and that you don’t chase after more stuff and newer stuff and better stuff is to stop trying to keep up with your neighbors. A survey from 2017 found that more than three-fourths of Americans are living paycheck to paycheck, so the Joneses are broke; normal is broke. Even though they may look like they can afford nice things and have their finances together, their financial reality is actually very scary. You really don’t want to be like them. So stop trying.
Remember this: most of your neighbors are broke and in debt up to their eyeballs, and under the façade of two nice leased cars and a fancy house full of credit-card purchased furnishings, they’re probably just as frightened about their financial future as you are about yours.
And that goes for your family members, as well. With them, it’s often even harder to say no to spending beyond your means—spending more than you earn. But if you have a healthy relationship, chances are very high that if you explain that you’re working on getting your finances in order when they ask you to do X or to buy Y that you really shouldn’t spend money on right now (such as an elaborate family vacation or going in on an expensive gift for Mom and Dad for Christmas for an anniversary or something similar), they will be grateful for your honesty and feel less pressure themselves.
And if, on the other hand, your friends truly are well off and are just in a league of their own, then they’re not going to fund your retirement or pay for your kids’ college, so why do you care what they think? If they can really afford to do all of those things, wonderful—but that doesn’t change your own financial reality and the fact that you can’t afford to (at least, not yet—but follow the things that I teach, and I promise you someday will!).
4. Differentiate (honestly) between needs and wants.
If you are painfully honest with yourself, you’ll likely recognize that much of your spending is for things that you want but not that you truly need. You probably already have a closet full of clothes, a car that can get you around for many years to come, and gadgets and toys and home furnishings that make your home or apartment burst at the seams.
Find out more about differentiating between needs and wants.
5. Do a no-spend challenge.
The reality is that you could probably go a long time without needing to buy anything at all besides food and gas for your car. To break yourself of mindless, needless, or even reckless spending, do a no-spend month (or week, or weeks). The savings can be dramatic, and the change to your mind-set monumental. This exercise can literally change your life forever—and it will, if you let it. Or if that seems too extreme, start with a no-spend week. Learn more about how to do a no-spend challenge.
Ask yourself if there is something that’s missing in your life or if your spending is a way of coping with (but not addressing) a deeper issue.
If you are regularly spending more than you earn and it’s not because you have an abnormally low income or because you are just really disorganized with your money and haven’t figured out how much you can actually afford to spend in a month, then look honestly at yourself to discover the deeper issue going on. Is there some issue in your life that you are trying to address by constantly buying stuff? Are there deep-rooted insecurities you’re trying to make up for? Are you not succeeding in one area of your life as you would like (or maybe even failing miserably at it), such as your physical fitness or reaching your career goals? Do you regularly feel lonely—is there a hole in your life because your relationships aren’t as strong as you would like them to be? (If so, examine your friendships, your family relationships, and your relationship with a higher power and see if that might be causing the problem.) Whatever the challenge is, admit the real problem, verbally recognize that overspending (retail therapy) is not going to fix the problem, and seek the help (maybe even professional help) that you need to overcome it.
And find a caring community that can help. Our new, closed Families for Financial Freedom Facebook group page is a place where you can find support to improve your financial well-being and reach your financial goals. You can do this! And we can help.
7. Train yourself to think long-term.
If you only ever think about the short-term—what you want to do with your money today or this weekend or this month or even this year—you will always be broke. In order to build wealth so that you can live your financial dreams, you’ve got to think long term. If you don’t always want to have a car payment and if you ever want to pay off your mortgage, you’ve got to think long-term. If you want to get out of credit card debt—for good!—you’ve got to think long-term. If you want to actually start saving toward your children’s college educations instead of just thinking that you know you should, you’ve got to think long-term. If you want to have a nice (or even amazing—it really is possible and probably isn’t nearly as hard as you think) retirement, you’ve got to think long-term.
8. Create and commit to follow a budget or spending plan.
To help you stop spending more than you earn, you need to follow a budget. I know you might cringe when you hear the word, either because of past difficulties with budgeting or because of negative feelings you might associate with the word that have kept you from budgeting in the past. But a budget, or spending plan, is just a list of monthly goals for your money. It is where you decide what you want to spend for each area of your finances.
As you create your first budget and then work to tweak it, don’t shoot for perfection and don’t be too hard on yourself. It will take a few months for you to get most of the kinks worked out and for you to start really budgeting effectively. But when you do, chances are that you will feel like you got a raise, even before you start adjusting your budget in order to spend less and save more. Find steps for creating your first budget here and get help to stick to your budget here.
Ready to start budgeting? Download our simple budget form here so you can get started today!
When you are working to stop overspending, you will probably want to estimate a little high for your different budget categories at the beginning, just to give yourself some wiggle room. We’ll start working on ways to find more money in your budget a little later in this article.
7 Simple (and Crucial) Steps to Put Your Money on Autopilot for Financial Success
13 Top Tips to Help You Stick to Your Budget
9 Must-Know Tips So You Can Start to Save Up for Large Purchases
21 Best Tips to Help You Spend Less Money
9 Surefire Steps to Help You Get and Stay Out of Debt
9. Understand your complete financial picture.
In addition to creating a budget, it’s important as you’re working to stop overspending that you understand your complete financial picture. That means that you need to know not only your monthly income and (at this point) rough estimate of expenses, but you also need to know how much total debt you have and how much each individual debt is. I know it might be scary to actually look at the real numbers if you’ve been avoiding doing so for a while (I admit I do this when I avoid stepping on the scale for a while after the holidays!), but in order to address the problem you’ve got to clearly understand what the problem is. So set aside an hour or two sometime this week to roll up your sleeves and really dig into the numbers, and when you’re done it may be a hard reality to face, but from there you’ll know more fully what you need to do to start tackling your debt and get your financial life back on track. It may be hard, but I promise it will be worth it!
To help you keep track of your overall financial picture, I recommend using my favorite personal finance app, Personal Capital. With this free app you can monitor your progress and see your debts shrink and your bank accounts grow over time. This app lets you see not only your balances in all of your various checking and savings accounts and for your credit cards and things like that, but it also links to your investment accounts, including your company 401(k) plans or other retirement accounts, so that you can see your complete financial picture and know where you are financially at any time. Sign up for a free account here!
10. Get on the same financial page with your spouse.
One of the most important things you can do as a married couple in order to stop overspending is to see eye to eye financially.
If you currently are engaged or talking about marriage, you need to have open and honest conversations—lots of them—about your beliefs about money. And seek good pre-marriage counseling to talk about your views on money, in-laws, kids, religion, and more.
If you are already married, then it’s time to combine your finances and be one. If you still have separate checking accounts and savings accounts and things like that, as long as you intend the marriage to last, then you should combine them. The reason is simple: if you are sharing a life together, you need to share your money. Because money affects virtually everything that we do. When you agree on how you spend and save and invest your money, you agree on your personal and family priorities and goals and values.
And if you’re not on the same page financially, there’s the very real possibility that no matter what efforts and what progress one of you makes with your finances, the other spouse is going to (either intentionally or unintentionally) thwart those efforts. So you need to make sure that you are working together if you are going to stop overspending and find financial success.
11. Figure out ways to reduce your spending.
You can probably reduce your spending in almost every item of your budget, if you become very intentional with your money. There are so many ways to reduce your spending, in fact, that I’m not going to list them here because it’s enough great content to be an article (probably a book!) all on its own. For a great list of ways that you can start spending less money in different areas, read this article with more than 20 ideas on how to reduce your spending in virtually all categories of your budget.
But here are just a few ideas to get you started: you can slash your grocery bill, go on a clothes-buying moratorium or spend less on clothing, save on your utilities bill, cut your cable or satellite, cut your entertainment spending or fun money allotment (or both), opt for a cheaper cell phone plan, go on a no-spend challenge for a week or a month, reduce your driving and save in other ways on transportation, downsize your automobile or home, reduce your travel and vacation spending, and curb your (spending on) gift giving.
12. Create an emergency fund.
As you are working to reverse your financial situation, begin to build a small emergency fund. I recommend building up a baby emergency fund of at least $1,000 (or up to one month’s worth of expenses if you feel you need a little bit more of a cushion) as quickly as possible by taking on extra work or otherwise increasing your income, selling stuff around the house, reducing your spending on things like food and entertainment, or (ideally) all of the above.
At first you may feel like you can put only $50 or $100 a month toward your emergency fund, but increase this as quickly as you can. Try to have $1,000 (or $500 if you make a household income of less than $20,000 a year) saved within a couple of months. Again, if you feel more comfortable with a little more of a safety net, then you can increase that to up to one month’s worth of expenses. And then save a fully funded emergency fund once you are out of consumer debt. Learn here how to build a three- to six-month emergency fund.
13. Increase your income.
Even though reducing your spending is the most important part of the money-problem-solving equation (because you can always outspend your income, no matter how high it gets), increasing your income is a great way to turn your finances around more quickly. And overall, you have more control over how much you earn than how much you spend. There is only so far you can realistically cut your spending, but the amount of money you can earn is nearly limitless. (That’s one of the reasons that being a blogger and writer and business owner is so exciting!)
Ready to earn more money? Sign up here to participate in the free 10-day Earn More Money, Change Your Life challenge and learn actionable steps you can start taking today to increase your income!
In rare cases, the problem truly is a lower than sustainable income. If that is the situation you are in, then know that you’re not stuck. You’re not. You can start taking small steps to increase your income so that in five or ten years your financial situation is drastically different than it is today.
You may need to get a second job temporarily. If only one spouse is working in your household, the other might want to get a night job or work-from-home job to help make ends meet. Longer-term, you’re probably going to want to look at training or education that can help boost your income. Though a college degree is not a guarantee of a high-paying job, statistically you are likely to make more money, and sometimes significantly more, by earning a degree. Just be smart about it and earn a degree where you gain an actual marketable, high-demand, well-paying skill. Learn more about the many ways that you can increase your income.
14. Start planning for large purchases and expenses.
Your overspending is likely partly due to buying with credit things that you should be saving up to purchase with cash. From cars to appliances and furniture to Christmas and wedding-gift shopping to car maintenance and home repairs, start planning and saving for larger, periodic purchases and expenses. As soon as you have a fully funded emergency fund of at least three to six months of expenses, set up various savings accounts to save up money for these larger expenses. So, for example, set up separate savings accounts for appliances and furniture, home repairs and maintenance, car maintenance, car purchases, Christmas and gift giving (or use two separate accounts for this, if you choose), vacations, and so on.
If you don’t already have a bank that will allow you to easily set up multiple savings accounts, then I recommend that you use Capital One 360 to do so. We have been banking with them for 14 years (since the time they were still ING Direct), and they have been a great bank, even after being acquired by Capital One (which I admit I had my reservations about). We have more than 10 savings accounts for our different savings goals and irregular expenses, and it works great because we never accidentally spend money that was supposed to be allocated for one thing on something else,.It also helps us very easily track our progress toward our various financial goals.
15. Find new hobbies and activities that are less expensive.
Since I have a personal finance blog, this probably won’t surprise you, but many of my favorite pastimes don’t cost anything at all. There are so many things you can do for free (or really cheap!) that I just don’t feel a need to spend much money on entertainment and hobbies. Some of my own favorite free hobbies are going hiking and camping (which is free or very inexpensive), playing at the park and splash pads with my kids, going running, reading (since I’m an editor, that makes sense 🙂), going on walks and bike rides, reading to my kids, watching one of my oldie-but-goodie favorite movies (at home), and going to museums and parks and zoos and aquariums and things on their free days.
Our local zoo and aquarium both have one or more days a year where military personnel and veterans and their families (my husband is a veteran) can go for free. Our local heritage park and children’s discovery museum have one or more free days open to everyone. And through our library (have I mentioned how much I love the public library?!), you can get a community exploration card where for one month each year you can go to all of the local museums and also our local aviary one time as a family for free. (So cool!) You should find out if your own library does something similar, or you can Google “______ museum free days” or “___________ zoo free days” to see if your local attractions have free-admission days. You can also Google the name of the place and “discount” to see what comes up, if there don’t appear to be any free days. If you can’t find the information you’re looking for online, call the place directly and ask if they have any free or reduced-admission days. You don’t lose anything by simply inquiring.
For example, the local water park near our home has an awesome discounted season pass you can buy (for $25 for the season!), but I never would have known about its availability this year if I hadn’t called and asked.
See this article for ideas for free and cheap, fun activities for the kids.
And if you love to go out to eat or go to movies for your favorite pastime with friends or family, you can find less-expensive alternatives there, too. Instead of doing dinner at a favorite restaurant, get together at someone’s house to cook or to make (or simply eat) different desserts. Rent a favorite classic (or watch one on Netflix or from the library) instead of going to a movie. Go on an evening hike or drive instead of going out for drinks. Here, too, the possibilities are virtually endless. Find ways to save money eating out here.
I know that it’s difficult to reverse habits and to make lasting change. Learning how to stop overspending may not be easy. It’s a lot easier (at least, in the short-term) to buy that new pair of designer jeans or another handbag then it is to say no. It’s easier to take the kids to Wendy’s for dinner or order pizza than it is to stick to your meal plan. But spending more money than you make or even just more money than you should is a destructive habit that, if allowed to continue, could forever—really, FOR-E-VER—negatively affect your financial security and future.
Do you have a problem with overspending? Do you regularly spend more than you should or even more than you earn? Are there things that you have found that have helped to curb your spending in the past? Leave a comment below. I would love to know your thoughts and experiences about overspending and how to stop overspending!
Invitation to Share
Was there something in this article that inspired you to change something about your money? Are there ideas or tips that you feel could help a family member or friend or people in general? Would you please take a minute to share this article via email or social media? I would love your help to share these principles of financial well-being with others. Thank you!
Join our new, closed Families for Financial Freedom Facebook group to get support and share ideas for how we can all improve our financial well-being by earning more, spending less, saving more, and investing more and reach our financial goals. You can do this! And we are here to help.