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Understanding Overspending & How to Stop It

A woman looks down at her bills and credit card and realizes she is overspending.

There are many reasons why you could find yourself overspending. It might be because you aren’t aware of how much you spend every month. Or you could be guessing your take-home income amount, expenses, debt payments, and then spending incorrectly.

In the end, your bank account balance dips lower than expected. Whatever the reason, if you’re ready to take control of your finances, these tips will help you understand overspending and give you guidance on how to stop overspending in its tracks.

Effects of Spending Too Much Money

In many cases, knowing how to stop spending money has to do with identifying the emotional and psychological triggers that cause you to spend. Our brains are programmed to seek out immediate access to short-term goals. You have to train your brain to develop self-control when it comes to spending.

Not having self-control when it comes to your finances can be damaging. Overspending can leave you strapped for cash when the unexpected happens in life — like an emergency that requires hefty financial assistance.

Learning to curb your spending ensures you’ll establish good financial habits for bigger purchases you’d like to make in the future. These purchases could include a downpayment for a home, car or saving up for your next big vacation.

Stop Overspending With a Budget

You’ll be able to control your spending once you have a better visual of where your money is going. Start by tracking your expenses for a couple of months. With your Jeanne D’Arc Credit Union account, use online banking to get your recent debit and credit card statements, along with any receipts you have for cash transactions.

Divide your expenses into categories: groceries, housing, utilities, dining out, clothing, savings, car, and any other category-specific to your own financial needs. Total up each column to see how much you spent in a month and how it changes in the next couple as you track.

If you already have a budget, compare it to your monthly expenses and see where you could cut back on spending.

Set Short-Term Financial Goals

Setting an attainable financial goal is the best way to stay motivated as you curb your spending habits. Having these goals will constantly remind you of the reasons you’re cutting back on expenses while also making a few sacrifices. Be sure your goals are specific.

For example, instead of a more generic goal of decreasing your spending on entertainment, try setting the goal of decreasing spending on eating out at restaurants from $250 monthly to $100 monthly. Having a quantifiable goal gives you a specific target.

Regardless of your goals, it’s important that you keep them simple, make them attainable, and post them somewhere visible so they stay in focus.

Try the Cash-Only Approach

The convenience of a credit card makes it easy to pay for your daily purchases. It also makes it easy to overspend!

When you’re nonchalantly handing over your card to make a purchase, it’s easier not to take note of the cost and how much you’re spending. With cash, you physically can see how much you have, and how much of your funds are diminishing with each purchase. By paying only in cash, you’re forcing yourself to only spend what you have.

Based on your budget, take out some cash at the start of the week and put it in an envelope — which will act as your ATM for the week. Draw out a few bills here and there to cover your purchases, and if you find yourself running low on cash, you’ll have to figure out a way to make your money stretch.

Leave Credit Cards at Home

Take the same approach from our above tip even when you’re going out to shop or dine — which is typically not a fixed amount. Unless you know you’re going to make purchases using your card and plan to pay them off immediately, there isn’t a reason to take your credit cards with you.

If impulse credit card purchases are what’s affecting your finances, you might not only stop carrying your cards but also delete any stored card information in web browsers on your phone and computer. By adding this small barrier, you can buy yourself some time to decide if the expense is truly needed or if it’s unnecessary.

Automate Your Bills

Automating your bills can also help with overspending. It simplifies the decisions you need to make each month. A final tip to help with overspending money involves automating bills. Automation can be done across your bills, investments, debt payments, and any other recurring expenses.

Since you’re likely to have multiple monthly expenses, try to sync up the bill payment dates so they align with your direct deposit. You can do this by calling each of your billing companies and asking them to reset the billing cycle to match your paydays.

How to Stop Overspending Today!

Curbing your overspending could be the start of a different financial future for you and your family. While it may seem daunting, remember that avoiding overspending boils down to good habits you build day to day.

Keep your financial education going. Click below for more financial wellness opportunities with Jeanne D’Arc Credit Union!

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