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There are two types of shoppers, those who find it a dreadful ordeal and those who can’t seem to get enough of it.
If you find you sluggishly drag yourself to the stores, you probably don’t have too much of an issue with overspending.
However, if you are a person who loves the excitement of making a purchase, you probably find that it’s not uncommon for your pockets to be empty.
At the end of the week you might be wondering where all your money went. You may need some tips on how to prevent overspending! Don’t worry, you are not alone. Did you know that the average American overspends by about $7,400 a year?
A love of shopping isn’t a bad thing until it gets to the point where you are truly living beyond your means and need to figure out how to stop spending money.
What are the signs you are overspending?
First things first. You need to know the signs that you are spending too much money each month!
Here are signs you are spending too much money:
- Too much credit card debt
- Only making the minimum payments on your debt each month
- You are not saving any money each month (Check out these reasons you can’t save money)
- Spending more than you make
- Living paycheck-to-paycheck
- Not sticking to a budget
- Using credit cards to make purchases
what are the psychological reasons for overspending?
I can’t stop spending money! You may feel this way and to some degree it can be true. There are some psychological factors in overspending that make it even harder to stop.
Understanding these can help you gain control over your budget and your bank account! Here are a few psychological reasons you may be overspending.
Emotional and Stress Shopping
You’ve heard of emotional eating, well there is such a thing as emotional shopping. Sometimes we buy things to feel better or make ourselves happy.
Or if we have a lot of stress in our life, spending money may temporarily make us feel better. Emotional shopping is probably one of the most common psychological reasons people spend too much money.
The Scarcity Principle
This just means the less available something is, the more you want it. You may buy something because you think it won’t be available soon and it is your only chance.
Anchoring is about how people evaluate the price of something when deciding whether or not to buy it. A good example is if something is normally $200 and is on sale for $100, you will focus on the savings amount of $100 instead of the actual cost.
You might purchase it because you think you are saving so much money, but in the end maybe you shouldn’t be spending the $100 in the first place
Sometimes we make purchases we shouldn’t make just because of the social influence of someone we are shopping with! Human nature of social camaraderie can make us overspend our budget.
Here are some ways to stop overspending money:
Use lists to limit what you spend
If you want to know how to stop spending money on unnecessary things, simply making a list can help! Before heading to the grocery, department store or the mall, make a list of what you need to buy.
The problem with shopping is sometimes we gravitate to what we want to buy, rather than just what we need. When you get there, restrain yourself from eyeing those sales.
If it isn’t on your list, don’t go there. Sticking to a list will help you stop overspending.
It can be hard to shop with total blinders on though. If a sexy pair of boots makes eyes at you from across the store it can be hard to resist.
So, in the case that you do see something you really want, think about it overnight rather than buying it. If you still want it in the morning, it will be worth the trip back, if not, you’ll find you just made your first decision to shop within your means.
Plus, maybe overnight you can think of a way to come up with the extra funds for the boots! Got something in your closet you never wear? Sell it!
Avoid impulse shopping
This goes along with the step #1. A sale may look great, but it causes you to spend more money and blow your budget. And, you might be spending on something you don’t really need.
Next week there will be new sales, and the next week after that.
Stores provide great offers in order to suck you in to buy them. Stick to your guns and buy only what you need so you can stop overspending money.
Not even going into the store, or visiting the website is one of the best ways to limit how much money you spend. If you specifically want to stop spending money on clothes for instance, then not looking at them is the #1 way to prevent overspending!
Understand the psychology of your overspending
We’ve all done it. Gone to the mall and bought ourselves a treat because we had a bad day. Or a bad week, or a bad month lol.
Sometimes we overspend and waste money to fill an emotional void. Understanding the psychological reasons you overspend can help you figure out how to stop spending too much money.
Try to find alternate activities to boost your mood that won’t cost you extra money. Not only will you be getting control of your budget, you might increase your mental and physical health.
Shop with cash to stop overspend
It’s really easy to overspend when you rely on credit cards. There is something about using a card instead of cash, that makes it feel almost like you aren’t really spending actual money.
And your mind can play tricks on you, justifying a big purchase by saying you will pay it off later.
Swiping that card without thinking or looking at your receipts may mean you have a heart-stopping shock at the end of the month when you get your new statement.
Credit leads to large bills and it’s harder to keep track of how much you spend.
Plus, if you have an interest rate on your card, then you will end up paying more for the item than the store is charging!
Instead of using credit cards, set aside envelopes filled with cash before you go shopping to stay within your budget. Every time you have a few extra dollars left over, you can put them in a new envelope and build a “treat” fund (for sexy boots!)
Want to learn more ways to save money when you are on a tight budget, try these tips!
Pass up those special offers
Companies love to send us online coupons, flyers in the mail, and those cute little reminder postcards to come on down to shop and open our wallets. If you really want to stop overspending your money, ignore them!
Throw these out without even looking at them unless there is a purchase you absolutely need (in that case you might find you saved yourself a few bucks!)
Special offers are retailers ways of getting you in the door and inspiring you to spend more money. You can prevent overspending by ignoring those offers.
stop going out to eat
According to the Bureau of Labor Statistics, households spend as much as $7,000 a year on food and half of that is on dining out!
Eating out at restaurants is a huge money waster. Have you ever really looked at the price of a soda in a restaurant? It is like $3 now!
When you make meals at home for your lunch all week at the office, you could be saving as much as $50 a week. Plan your meals out to gain more control of expenses.
Save even more money with these 40 Cheapest Foods to Buy When You’re Broke.
You can still go out to eat on occasion if it fits in your budget, but if you do try these tips to save as much as you can.
Be selective with your coupons
Only use coupons for items you use, don’t buy something out of the ordinary in order to save a few cents or dollars because this isn’t really saving you anything.
Coupons for the wrong items can just end up wasting money and burning through your budget.
Don’t fall for the old “bait and switch”
If you do head off to a sale, stick to the product that was advertised.
Unfortunately, some merchants will put two items on sale that they know will sell quickly. Their hope is that once that sells, they can sell you a different, more expensive product.
If the product you came for isn’t available, turn around and walk out the door. Look for it online or at another store for a similar deal.
Track your spending down to the cent
Ultimately, a budget is really key to learning how to shop within your means and prevent yourself from overspending. It can be difficult to know if you are overspending, if you don’t understand all the numbers ahead of time.
If you find yourself really falling into debt, set up a budget worksheet or even just a paper list to keep track of your incoming and outgoing money.
Write down all your income and expenses to see if you are spending more than you are taking in. Look for hidden recurring charges and subscriptions you can cancel.
You can then better set a budget for yourself. If you realize you are spending too much, you can find ways to reduce your spending. Knowing how much you should save each month is also important.
And if you realize you have extra, you can splurge on something you want. Or even better, you can find a way to invest that and turn it into more!
write down your financial goals
One way to get yourself to stop spending too much money is to write down all your personal financial goals as motivation.
Maybe you want to save money for a downpayment on a house. Or you want to save enough to invest money in stocks, or start your own business. The most important thing about saving money and not wasting it, is that you can use it as a tool to make more money.
If you are just spending all your extra money on things you don’t really need, you will never get ahead or experience financial growth.
Knowing your goals and reminding yourself of them anytime you feel like overspending can help you stop!
Unsubscribe to emails
If you are getting emails every other day from your favorite stores telling you about sales and showing you things you might want to buy it will not help you stop overspending!
Take away temptation and just unsubscribe from those emails. Out of sight, out of mind!
Stay away from stores
This goes along with the step above. If you really want to stop spending so much money, don’t go to the mall and don’t get online.
It can be hard to resist the urge to buy something when you see it. The best way to avoid this is to not put yourself in the situation in the first place!
Go for a walk or workout instead of visiting the mall. Read a book instead of getting online. Finding healthier activities to substitute for shopping will help you improve your life in more ways than just financial.
What are the effects of spending too much money?
One helpful tool in preventing overspend is knowing how harmful it is! Spending too much money is hurting your financial and mental life.
Write down all the reasons you don’t want to overspend and remind yourself of these before you buy anything.
Here are just a few of the issues overspending can cause:
- Incurring costly debt
- Preventing yourself from making more money
- Causing mental stress
- Never getting ahead
- Preventing yourself from buying a house
- Cycle of guilt
The point is, overspending is harmful. Learning to shop within your means and stop spending so much money sounds hard, but you just need to make a plan for yourself to make it easy.
Here are my favorite budgeting and saving apps:
iBotta for special offers and cash back on groceries.
Acorns which takes your spare change from purchases and invests it for you to help you make even more money.
Personal Capital for money management. Get a money dashboard, free analysis and personalized wealth advice.