If it feels like money from your paycheck vanishes from your bank account just as soon as it arrives, you’re not alone. Overspending is a common financial problem for many people. In fact, learning how to stop spending money is a skill in and of itself, and it takes time and diligence to grow your savings.
However, it’s important to save money to protect yourself from unexpected expenses in life and to plan for long-term goals, like retirement. But, if you want to learn how to avoid overspending to keep your financial goals on track, you need a game plan. Thankfully, these eight tips can help you control spending and get your saving goals back on track.
8 Actionable Tips To Avoid Overspending
1. Create A Budget
Learning how to create a budget is one of the most important financial skills to learn. In many ways, a budget is a form of financial defence; it helps you monitor what categories of spending your money goes towards each month and identify potential problem areas of overspending.
To create your budget, start by listing all of your necessary monthly expenses. These are unavoidable expenses, and often include:
- Phone bill
- Gas and vehicle expenses
Once you understand your fixed monthly costs, you’ll understand how much disposable income is left over from your monthly paychecks. If you want to stop spending money, this information is vital since it defines how much disposable income you have so you can set a spending limit that makes sense.
As an extra tip on how to stop overspending, try setting monthly spending limits for each budget category. For example, once you know how much disposable income you have each month, decide how much you’re willing to spend on things like entertainment, clothing, and seeing friends. If a purchase goes over your spending limit, you’re overspending, so it’s time to pull back the reins.
2. Start Using Cash
One of the most common tips to avoid overspending is to switch to cash instead of credit cards.
Credit cards are powerful financial tools when used correctly. After all, with cashback credit cards, you technically save money on everyday purchases, since you usually get 1% to 2% back as cashback. However, benefitting from a credit card requires paying off your bills on time. It’s also easier to overspend with a credit card versus cash, since cash lets you visualize how much you’re spending and how much money you have left.
If credit cards are the source of your overspending, try using the envelope budgeting system. With this system, you portion out cash into envelopes to cover each of your monthly budget’s spending categories, so your grocery envelope might get $350 and your entertainment envelope might only have $50. Once the money is gone from an envelope, you’re done spending on that category for the month.
3. Go On Cheaper Outings
Learning how to avoid overspending requires discipline. But, we’re all human, and it’s important to avoid burning out by still enjoying life and socializing.
However, entertainment can feel like a problem area if you’re trying to stop spending money. But, you don’t need to go to expensive restaurants or pricey attractions to stay on-budget. In fact, there are numerous free or cheap entertainment ideas you can try, including:
- Going to state or local parks
- Having a picnic
- Hosting a potluck with friends
- Going for coffee
- Getting books from your local library
- Attending free public events
- Heading to the beach – discover ways to save money for summer vacation
And, if you have to do some shopping, you can avoid paying full-price by learning how to save with Piggy. With Piggy, you can use coupons and cashback rewards to keep more of your hard-earned money in your wallet. Piggy is also available on your smartphone and as a browser extension, so you’re covered when shopping online.
4. Try A No-Spend Challenge
Another trick for how to stop overspending is to take on a no-spend challenge. This is what it sounds like: you decide to not spend money for a certain amount of time to help hit your saving goals.
No-spend challenges have exceptions, so you can spend money on essentials like food and rent. However, the idea is to eliminate all frivolous spending for a certain amount of time. Commonly, no-spend challenges last for one week, two weeks, or even an entire month if you’re feeling ambitious.
This challenge might sound trivial, but there’s something powerful about giving yourself a concrete goal to stick to. If you want to curb your overspending immediately, take on a weeklong challenge to see how you do. If you last a week, don’t be afraid to take on additional, longer no-spend challenges moving forwards.
5. Set Financial Goals
Oftentimes, overspending stems from a lack of goal setting. After all, if you don’t know why you’re saving money, what’s the point of putting money aside?
However, one important area of personal finance is to set financial goals. Setting goals provides your “why” whenever you feel the urge to spend money but need a reminder to hold back, ultimately helping you stay on track with saving.
For starters, outline some short-term financial goals. These goals typically take between several months to a few years to accomplish, and include things like:
- Building up six months of living expenses in an emergency fund
- Bringing your lunch to work everyday for a month instead of eating out
- Paying off a small amount of credit card debt
- Saving up for college
- Buying a car
- Going on vacation
You should also outline several long-term goals you want to chip away at while you tackle short-term objectives. Examples of long-term financial goals include:
- Becoming debt free
- Saving for retirement
- Saving for a mortgage – learn ways to get the best mortgage rate possible
By setting both types of goals, you create a roadmap for your finances. If you’re in a position where you need to control spending, you can mentally reference these goals to remember why saving is so important.
If you need help tracking your progress, you can try the Simplifi by Quicken app. This app lets you create short and long-term savings goals, track spending, and get a quick snapshot of your monthly spending to see if you’re sticking to your plan.
6. Switch To Cheaper Alternatives
Sometimes, you don’t have to stop spending money to avoid overspending. Rather, switching to cheaper alternatives can be a happy medium between going cold turkey and going over your monthly budget.
Examples of categories where no-name brands or cheaper off-brand products make sense include:
- Cleaning products
- Some clothing brands
- Gifts and party supplies
- Craft supplies
- School supplies
- Some cosmetic brands
It’s still important to use discretion here. For example, for things that go in or on your body, like food and makeup, it’s never worth sacrificing quality for the sake of saving a few pennies. Similarly, buying clothing or appliances that are inexpensive but poorly made just means you’ll have to replace them in a few months’ time when they break.
But, is buying that $1 cleaning solution from Dollar General a smarter financial move than the $3 name-brand solution at your local grocery store? Absolutely, and the same goes for plenty of other products.
7. Cancel Unused Subscriptions
When was the last time you looked at your list of recurring subscription charges? If it’s been several months or even a year or longer, there’s a chance you’re paying for services you barely even use.
This happens more often than you’d think. Free trials expire or people forget they’re signed up for something as life gets busy. Next thing you know, an underused streaming package or two and you’re spending $50 every month for no point.
Take an afternoon and go through your previous bank statements. When you spot subscriptions, be honest with yourself if they’re worth the cost. If it feels like you’re overspending, call the provider or cancel online that same day to save more money each month.
8. Learn Your Shopping Triggers
Why do people overspend? For some, shopping is a form of stress relief. For others, overspending results from a lack of discipline. Finally, many people overspend without even realizing it because they never create a budget or set financial goals.
Whatever the case, it’s important to identify your shopping triggers so you can learn how to stop overspending. Think about the last few times you purchased something and then regretted it. Was it a stressful week at work that caused you to shop, or did you shop without thinking about the potential financial repercussions?
If stress causes you to spend, you can try taking up more productive habits instead, like exercising or a new hobby. In contrast, if you usually realize you’re overspending a few days after the fact, it’s time to revisit your monthly budget so you understand your spending limits.
Getting Your Spending Under Control
There isn’t a single formula for figuring out how to stop overspending. Additionally, everyone makes mistakes sometimes and goes over budget. However, the most important tip to get your spending under control is to stay consistent. As long as you steadily grow your savings and work towards financial goals, you can still splurge once in a while and spend money on things that matter to you.