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Three Steps to Stop Overspending in Its Tracks

The daily grind is full of twists and turns. An unavoidable fact of life is that almost everything comes down to how even your daily activities might affect your budget.

Saving for goals, whether it's retirement, a vacation, or your hobbies, requires planning and commitment. Sometimes, even the best-laid plans can veer off-course.

With how busy life can get, there’s always one particular activity that can cause anyone to fall short of their budgeting goals: overspending. Whether paying for daily necessities or occasional leisure purchases, losing track of your spending is a common financial pitfall.

Here’s what you can do to identify overspending in your life and keep it under control.

1. Understand the Causes behind Overspending

An article on U.S. News and World Report listed many common reasons why Americans are overspending. The causes originate from various sources, including one’s budgeting skills, the ever-changing costs of living, and even psychological factors influencing a person’s decision-making processes.

Based on the article, a few common reasons people overspend include:

  • Social pressure: The feeling that one must buy what everyone else is buying as proof of self-worth or status.
  • Lifestyle creep: An increase in income can also lead to an individual making more purchases than they usually would. We talked about lifestyle creep previously.
  • Emotional impulses: People may be compelled to spend as a way to regain control over their lives. Phenomena like “retail therapy” and “panic buying” stem from this need for control.

There are also material causes for overspending. This includes price adjustments due to inflation and how these changes might affect consumers’ perceptions of the costs of goods and services affected by them.

Now that we have identified some causes of overspending, let’s cover a few strategies to put an end to it.

2. Retool Your Mindset About Spending

If you feel like you’re overspending, even on necessities like groceries, you aren’t alone. Beyond market forces, numerous factors are at play in today’s environment. Consequently, parting ways with your money can feel like a simple, seamless, and sometimes mind-boggling experience.

Payment methods like one-tap checkout and buy now, pay later models are convenient. While these methods do have their uses, it can be easy to overuse them. That’s why it’s important to have a baseline to make your spending more practical and purpose-driven.

An article from Nerdwallet puts it best: try setting limits for yourself before you spend.

When they say “limits,” they mean separate your budgets by categories and define well in advance what you’re willing to spend.

Here are some examples:

  • Having fun but not depriving yourself: Budgeting is a lot like dieting. If you go without something for a long enough period, you risk relapsing into a bad habit. Allow yourself to see the movies or order takeout, but set a spending limit with each visit. Additionally, set limits on how often you engage in these activities.

     

  • Plan your splurges: Nerdwallet recommends planning your extra expenses ahead of time so you don’t face the hangover of an impulse purchase. This is similar to saving for a vacation. Check your budget and determine whether it’s a good time to reach for your purse or wallet.

     

  • Give yourself time to breathe. We get it. In today’s environment, there’s an overarching “fear of missing out” whenever something goes on sale. Before spending money on a limited-time offer or deal, take a step back and determine if what you want to buy is something you truly need. Give yourself a cooling-off period before making a final decision.

3. Save First and Maintain Accountability

Every time you get a paycheck, make a point to pay yourself first. Revisit your monthly budget and make sure you meet your savings goal before committing money to anything else.

Automation makes this task easier than ever before. If your employer does direct deposit, you can instruct payroll to send a set amount to your dedicated savings account. To repeat a practical adage: money you never see is money you never spend. It also alleviates any concerns that you aren’t saving as often, as this process is done in the background.

When you know why overspending happens, it’s easier to adopt strategies to counteract it. Always be mindful of how you spend your money so you can adjust your budgeting strategy to meet your goals better.

First Florida is committed to helping you save purposefully. Explore our website to learn more financial tips that help you live your best life.

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