If you take a look at your finances, you might find a recurring reason as to why you keep overspending.
Overpsending is a problem which affects many people. Whether you are rich or struggle to make ends meet, you too might find that you spend too much. Some reasons are financial and others are emotional.
The first way you can get spending under control is to take a look as to why you are spending too much. This is the first step.
After years of helping thousands of readers (just like you), I’ve compiled a list of the top 12 reasons that people over spend. You might find yourself in one, two or even more!
1. You Do Not Have a Budget
I know, I know. I probably sound like a broken record as I keep bringing up this budget thing. However, it’s true. If you do not have a budget, you have no idea where you are spending your money.
A budget is needed so that you can direct your money where to go each time you get paid. It also helps you know how much you have to available to spend on groceries, clothing, dining out and even entertainment. When you know you can only spend a certain amount in order to stay within your budget you can gain more control of your spending.
2. You Do Not Plan
This is one that many people don’t think about. If you don’t plan your meals (and stock your fridge and pantry accordingly), you are more likely to just hit the drive through for dinner. Doing this at $25 a pop 2 or 3 times a week really takes it’s toll on your budget.
Creating a menu plan will not only help you control your spending, you might find that you eat (and feel) much better too.
3. You Do Not Make A Shopping List
Before you go to the store, it is important you make a list. Check your fridge, freezer and pantry so that you are not purchasing items you do not need – especially produce.
There is so much waste in food that expires before you can consume it. That results in you buying items…..so that they can end up right in the trash can. Make sure you plan your shopping trip and then purchase only what you need, as well as what you can eat, before you hit the store the following week.
4. You Fall for Convenience
There is a quick fix for nearly everything. You can find dinners in boxes, small pre-packaged snacks, etc. Rather than purchase convenience items, buy the larger size snacks and then re-package yourself into smaller baggies. You will not only get more out of a box, but you can even control how much you put into each baggie.
There are other ways we pay for convenience. We pay for someone to iron our shirts, wash our cars and even mow our lawns. By doing these things ourselves, we can keep much more money in our own pockets.
5. You Use Plastic
We live in an age where our money is all digitally tracked be it on credit or debit cards. Yes they are convenient and easier than getting cash, but they make it easy to overspend. When you use cash, it is impossible to overspend. You honestly can. not. do. it.
I hear all the time that people pay off cards at the end of the month and that they don’t overspend, but that is not the truth for most people. You might think that it is just $10 a week. However, that $10 a week is a hit of $520 over the course of a year. What could you do with an additional $500 in your pocket?
Read more: How to Create a Workable Cash Budget System
6. You Do Not Pay Your Bills On Time
We all have bills. We know when they are due. By missing the due date, a late fee is charged. Make sure that you do not miss the payment due date so that you pay additional fees.
The additional downside of not paying bills on time is that it can also have a negative affect on your credit score. Learn how to organize your bills so you never pay them late again.
7. You Live Above Your Means
Few of us would not love new clothes or a newer car. We might also love having a larger home or the latest and greatest electronic gadget. The thing is, can you afford it? Is it a want or is it a need?
If you are using credit or loans to get items that you can not afford, then you are absolutely living outside of your means. Scale back and make sure that you can truly afford the house or the car and that it doesn’t ruin your budget and cost you too much.
Read more: Defining Your Wants vs. Your Needs
8. You Impulse Shop or Spend
Stores are good about making people spend money. They use signs, layout and even scents to lure you into wanting to spend more. The thing is, if you purchase something you did not intend to, then you are already blowing your budget and probably overspending.
Another way that people impulse spend, is to have dinner planned, but then decide at the last minute to go out to dinner instead. Why do that when you have food waiting for you at home (which you’ve already paid for)?
Another aspect of this is shopping out of emotion. If you feel a rush because of that new item, you may make the purchase out of impulse and emotion instead of need.
Read more: Stopping Impulse Shopping
9. You Shop Out of Boredom
I remember being in an on-line forum when my kids were little and we talked about our day. Many of the mothers went to the store every. single. day. They said they could not handle being in the house and just had to go somewhere. That resulted in them buying things they did not need.
If you are bored, find a new hobby. If you just need to get out of the house, why not go for a walk or play a game with the kids? Find a way to redirect your boredom so you stay out of the store.
10. You Do Not Have Financial Goals
When you do not have financial goals, you have nothing to work towards. You might want to get out of debt or you may want that newer vehicle.
Take a look at what you are spending each week on non-essential items. What would happen if you would put that money into savings or paid off your debt instead? How much closer would you be towards getting that new car or actually being debt free?
Find a goal you want to achieve. Talk to your family and see if you have something you can work towards together. By setting a goal that everyone wants, you will all be more aware of your spending and will contribute towards reaching it more quickly.
11. You Do Not Track Your Spending
I know many people who have tried to use cash and they say it does not work because they spend it too quickly. There are others I know who spend too much on plastic each month. The reason is that they are not tracking what they spend, which is a reason why they overspend.
If you use cash, this is where the envelope system is most helpful. You will track your spending out of each one so you can actually see where your money is going. As the envelope amount get smaller and smaller, you really think twice before you pick up that item — because you may not be able to afford it.
You can do this same thing if you use plastic. There are all sorts of tracking apps to help you monitor what you are spending on all of your various categories.
No matter how you pay for items, make sure you are always tracking what you spend – you might be shocked to learn where your money goes.
Read more: Creating and Understanding a Spending Plan
12. You Allow Sales To Lure You In
When you walk into the store, know many people who have tried to use cash and they say it does not work because they spend it too quickly. There are others I know who spend too much on plastic each month. The reason is that they are not tracking what they spend.
Before you can gain control of your finances, you need to figure out why you are spending more than you should. Simple changes to the way you view money can make all the difference.