If you are constantly reaching the end of the month with an empty bank account, it may be time to take a good hard look at you spending habits. One of the biggest pitfalls to healthy personal finance is overspending. Overspending can often result in an avalanche effect, blowing your budget for the month completely and resulting in financial stress. Rehabbing your budget is vital to getting yourself back on track to meeting your personal finance goals. Here are 5 steps you need to take when dealing with overspending.
Step 1 Face The Facts
The first step to managing and rehabbing is facing the facts about your spending habits. This doesn’t mean you need to beat yourself up about it, it just means you are acknowledging the situation, learning from the experience, and doing better.
Step 2 Identify The Problem, Explore Solutions
By identifying why you overspent, you can help prevent it from happening in the future.
- Did you overspend due to stress? Explore healthy stress management techniques
- Did you get overspend on take-out, fast food or fine dining? Time to re-evaluate your time management and grocery habits.
- Did girls night or boys night get a little out of hand and you overspent at the pub? Explore free or low-cost alternatives for a fun-filled night out on the town!
Step 3 Create A Plan Of Action
Just like any other form of habit change, you need a plan of action to change your spending habits. This includes re-evaluating your wants vs. needs and creating a realistic budget around those priorities, realistic being the keyword. If your budget isn’t realistic, you’ll blow it immediately and end up back where you started.
Step 4 Pay More Than The Minimum
If your overspending was on plastic, you’ll want to pay more than the minimum on your credit card payment. This will help you lower your debt and lessen the impact of interest rates.
Step 5 Curb Spending
Here’s some helpful tips to help you curb your spending:
- Put credit cards in a safe, leaving them locked up when you head out for the day. You’ll be less tempted to impulse shop.
- Set your fun-money budget and use cash only. When you pay in cash you’ll be more aware of your spending.
- Remove credit or debit card information from websites your frequently shop on. This will create an extra hurdle that can stop you from one-click shopping.
- Change up your drive home from work so you don’t pass your favorite fast food restaurants. You’ll be less tempted to stop if it’s out of sight.
- If you’re overspending is due to an emotional impulse or attempting to fill a void, you may want to reach out to a mental health professional. There’s no shame in reaching out for help.
- Start thinking about purchases in terms of how many hours it will cost you. You’ll work 2 hours for a nice meal out, and it’ll cost you a week worth of work for bigger ticket items.
Overspending can be a big problem, but there are solutions that can work for you.