Overspending is a widespread problem these days. People shop for many reasons other than needing necessities. They shop when they are sad, stressed, or just bored.
As a result, most people these days live paycheck to paycheck and wouldn’t be able to cover a $500 emergency if the need suddenly arose.
Breaking this habit isn’t easy. But there are ways it can be controlled, if not curbed. Here are 10 helpful tips on how to break a harmful and expensive shopping habit.
1. Identify Where the Money Is Going
To stop the problem, you need to get to the root. Is overspending just a general vice, or are there any specific products or services you’re spending an unreasonable amount of money on?
Take a good look at your bank transactions. Then, categorize your expenses and try to separate them into the necessary ones, the ones that were unnecessary but reasonable, and the ones that could’ve been avoided if not for snap decision-making.
This will give you a clear view of your current spending habits and help you identify expenses you might not have been aware of before.
2. Get Rid of Unused Memberships and Subscriptions
Our credit card information is tied to a lot of websites that automatically take our money unless that link is broken. This isn’t a surprise because we stream and buy things online all the time.
Sounds reasonable, no? You’d be surprised how many people keep paying for subscriptions and memberships they don’t use all that often for two reasons: 1) the “what if I need it” effect; 2) they forget to cancel them.
Tracking your expenses will help you catch the automatic expenses you ignore. Then, start curbing your spending by cutting them.
Yes, that includes the gym membership you don’t use.
3. Do Some Budgeting
If you look at “debt-free” and “FI/RE” communities, you’ll learn that most of them use a budget as their primary money management tool.
There’s a good reason for it.
Budgeting is the equivalent of tracking your spending before you spend the money. It lets you control how much money should go to each category of your expenses, including shopping. As long as you keep an eye on your transactions, you’ll have a good idea of how much money you’re spending and be able to course-correct.
4. No Browsing/Window Shopping
Window shopping and its 21st-century equivalent, online shop browsing, are among the biggest triggers of overspending.
It’s hard not to spend money on anything when you’re constantly interacting with products you have some degree of interest in. What should’ve been a reconnaissance mission can quickly turn into a trap that will strip you of your hard-earned money without you noticing it.
Not to mention, stuff you buy while browsing/window shopping has a higher chance of losing your interest down the line than the stuff you planned to buy.
Clever Girl Finance has more great tips on her blog.
5. Stick to a Shopping List
So, how do you control your spending when at a large store or shopping center surrounded by hundreds of items that could easily catch your interest?
You use a cheat sheet.
When it comes to shopping, having a list is your cheat sheet.
Compiling a shopping list might not sound like a very exciting thing to do, but it does work to your advantage on multiple fronts. It doesn’t let you forget what you need to buy and saves you from multiple store visits, it helps with curbing unexpected spending (or at least strays your hand a little by sawing doubt), and it helps you save time. Unfortunately, shelf browsing usually takes a lot of extra time.
6. Always Think Twice
Sometimes, buying unnecessary items isn’t so bad. So why not, if they’re in our budget and make us happy along the way?
The problem is most of the stuff we buy unplanned doesn’t make us happy in the long term. Impulse buys rarely end up being the source of long-term joy. It’s far more likely that a few days later, you will be asking yourself, “What was I thinking, buying this thing?”
It’s important to understand that curbing spending isn’t the same as going scorch earth and never spending money on anything other than strict necessities.
Instead, if something catches your eye, don’t grab it and put it in your shopping cart. Instead, keep it in your mind and think for a few days about whether buying it would indeed be worth it.
The ugly truth is that you’re much more likely to forget it ever existed.
7. Get Rid of Your Credit Cards (or Switch to a Pre-Paid Card)
Spending money is much easier when the limit on what you can spend exceeds your income. Herein lies the most significant trouble with credit cards – by paying only the minimums, you’re allowed to spend much more than you could afford otherwise. Until, of course, the time comes for you to repay the debt.
One way to fix this is to stick to spending the money in your account. Cash or debit cards are both thought to be far superior options.
Cash even gets some extra love due to the belief that having a constant visual reminder that you’re handing over your hard-earned money curbs the desire to spend it on unnecessary things.
Head over to One Frugal Girl for more information on how to stop shopping.
8. Automate Your Savings
Another way to curb spending is to lock the money away before you get a chance to spend it. Getting a high-yield savings account and setting up an automatic transfer for each paycheck is an easy way to do it (and strengthen your financial situation).
9. Challenge Yourself (and Have Fun Along the Way)
As hard as it may be to admit, the short-term gain is usually a much better motivator than a long-term goal.
Set small spending challenges for yourself, if for no other reason than to make yourself feel good and motivate yourself further.
One popular money-saving challenge is the “lottery” saving system you’ll quickly find online. When you save a specific amount of money each week (the amount differs from week to week – thus, a lottery).
Another one is a No Spend Challenge. It can last for a week, a month, or even longer. It’s a test of grit, as much as an attempt to take better control of one’s finances.
10. Ask for Help
But in the end, nothing will work long-term unless you get to the true root of the problem. So, what is causing your overspending?
Talk to someone you can rely on, tell them about the problem, and ask for help. Problems are always easier to handle when you don’t have to do them independently.
Photo by [WAYHOME Studios] via Shutterstock.com.