Today, I’m diving into a topic that can affect a person from any walk of life: overspending money. Money makes the world go round (or so it feels like on most days), and spending your money is indeed inevitable. But if your spending habits continuously land you in hot water, you may have to rethink how to stop spending money?
According to a study by Sui,Sun and Geyfman (2021) published in the International Journal of Consumer Studies, over 40% of American households feel like they are overspending and that they do regret their choices.*1
Overspending is a common problem that impacts many people, regardless of their income level. It can lead to financial stress, debt, and an inability to reach your financial goals. It should make one think about why something as potentially risky as a habit can become the new normal for people from all walks of life. Based on my experience as a money coach, I have found that there is always an emotional component involved in this, which sadly goes unidentified. This is why getting to the root cause of what triggers you to overspend is so important.
In this article, I’ll discuss the unconscious reasons why one may overspend, its effects on financial well-being, and six actionable ways on “how to stop spending money?“. By identifying these triggers and developing healthier coping mechanisms, you can spend less money and gain well-rounded financial discipline.
Why Do We Overspend?
Before I dive into how to not spend money, let’s take a moment to understand why we overspend in the first place. Overspending can often be a result of poor financial habits driven by emotional triggers in the form of stress, boredom, or the desire for instant gratification.
In a consumer-driven society bombarded with advertisements and societal pressure to have the latest things, spending your money is literally one click away. The result? This comparison leads us to spend more than we should on unnecessary things.
However, it’s important to note there may be a host of reasons why a person overspends, as everyone’s relationship with money is different. Let’s look at some case studies to better understand how a person’s upbringing or life experience can potentially affect the way they spend money.
For example, picture that a person has a very affluent upbringing, where they have access to the best of the stuff they desire on a platter, and they unconsciously carry over this outlook into adulthood. However, along the years, this affluence has diminished, and the person may still go out of their way to fulfill their wants disguised as needs. They resort to seeking loans from banks, borrowing from their future reserves, to fill in the urgency of meeting their desires.
On the other hand, consider a person who has grown up in a financially deprived environment. How might such a life experience contribute to overspending? In such a case, money is a scarce resource. There is a sense of uncertainty about money being there in the future. Such a person will feel compelled to spend money right now due to the fear of not having money tomorrow. This individual prioritizes indulging in their desires in the present rather than saving some money for the future.
Let’s dig a little deeper by reflecting on these simple questions to learn how your money script affects your overspending triggers.
- What does spending money mean to you?
- Can you recall a certain situation where you chose to buy something when you intended to save money? What do you think influenced this choice?
- Are there any specific things or areas one should and should not spend money on?
- Is a specific need, desire, or emotion one of the major motivating factors behind your purchases?
- When you think of your financial goals, are your spending habits in alignment with achieving them?
- How do you feel about your current financial situation in relation to your spending habits?
- Do you sense a specific pattern in your spending behavior?
- Do you find yourself avoiding conversations or seeking financial advice out of fear of what others may think?
- When you receive extra cash, whether it’s a bonus, tax refund or unexpected money, what do you typically do with it?
- Have you calculated where you’re spending money over a month or year? If so, what did you discover?
While answering these questions, it’s important to keep in mind that there is no right or wrong answer. Pick up a pen and a piece of paper, and write down the first thing that comes to mind as your response. This exercise will provide an opportunity to look into the underlying emotions, thought-patterns, and beliefs one may hold over their relationship with money.
The Consequences of Overspending
Let’s talk about it, overspending can wreak havoc on a person’s financial life and overall well-being. It can lead to dreadful credit card debt, which can quickly spiral out of control than we’d like to admit due to those high-interest rates. And besides that it can also hinder you from saving for retirement, emergencies, or other financial goals.
But wait, there’s even more. Overspending can cause stress and strain on your relationships. Financial problems are one of the leading causes of relationship strain, and overspending can certainly add fuel to the fire.
Despite these factors, you do not have to be afraid. Feeling shame, guilt, or remorse is normal, but know that you are not alone. Numerous people strive every day to overcome this habit. With self-belief and help, you can take slow and steady steps toward your holistic financial well-being.
6 Foolproof Ways to Avoid Overspending
Now that we’ve got the why’s of overspending down, let’s discuss the six foolproof ways on how to stop spending money in excess and gain financial discipline.
1. Create an easy-to-follow Budget
One of the most effective ways to stop spending money unnecessarily is to create an easy-to-action budget. We don’t need to complicate things right off the bat. Creating a budget allows you to see where your money is going and determine areas where you need to stop spending money. It also helps you prioritize your spending and make more conscious economic choices.
Once you start following a planned budget, you may find this practice counterintuitive to your overspending ways. Hence, being patient with yourself here is key. This effort will help you keep track of your expenses.
2. Bid Bye to Impulse Buys
Impulse purchases can easily bust your budget. We’ve all been there—guilty of making a spur-of-the-moment purchase that we later regret. So, how to stop spending money on unnecessary things? To understand that, try implementing a “cooling-off” period.
Before making a purchase, wait for twenty-four hours. This will give you time to ponder about whether you genuinely require the item or if it’s just a raging want. More often than not, after twenty-four hours, you’ll find that the urge to buy that item has passed, and in this way you’ll save yourself from overspending.
3. Use Cash Instead of Credit
Credit cards are without a doubt convenient, but they can also easily be a catalyst for your erratic spending habits. Swiping a credit card is so easy that we often don’t think about the consequences, but when you use cash, you’re more likely to think twice before making a purchase and spend less.
Using cash for your everyday expenses, such as groceries and entertainment, forces you to be mindful before making the purchase. Having cash on hand is a tangible practice that helps you stay on top of your budget and is a great way to  manage your spending efficiently.
4. Set Financial Goals
Setting financial goals can help you stay motivated and laser-focused on calculative and wise spending to ensure your long-term financial success. Whether it’s saving for a down payment on a house, paying off debt, or building an emergency fund, having a goal in mind can help you avoid overspending.
When you’re tempted to make an unnecessary purchase, remind yourself of your financial goals and how this purchase will affect them. This simple tip to check in with yourself can help you make more conscious financial choices and steer you to spend the right way.
5. Find Alternative Ways to Cope with Overspending
Retail therapy may seem like this generation’s fix to cope with stress, boredom, or other emotions, while it can also easily leave your bank balance in the ditch, if you are not mindful. But here’s the good news: there are healthier and more cost-effective ways to deal with these emotions.
Instead of turning to shopping, consider going out for a walk, practicing yoga, or catching up with a good friend when you’re feeling down. By replacing emotional spending sprees with healthier, low-cost activities will help you manage your emotions better without breaking the bank.
6. Surround Yourself with Like-minded people and getting an accountability partner.
Your social circle can significantly impact your money habits. If your friends are all about overspending and are constantly pressuring you to keep up, it may be time to reevaluate those relationships. Instead, seek out and surround yourself with people whose financial goals and values align with yours. It’s a lot easier to stay on track when you have a supportive tribe and not feeling peer pressure to spend beyond your means. Another tip is to find yourself an accountability partner. This can be someone you trust and someone who’s also striving towards their financial milestones while guiding you on how to stop spending money needlessly. Checking in regularly with each other, discussing the progress you have made on your financial goals can help in overcoming any challenges you face.
If you want some extra expert guidance, consider working with a money coach. They can provide you with tailored advice and that extra dose of accountability to achieve financial wellness.Â
Yes, overspending can seriously derail your financial well-being and overall quality of life. But by learning how to not spend money, you can dodge the overspending triggers and gain financial discipline.
Remember, being patient and consistent with yourself is the key ingredient while implementing these strategies. It may take time to break old habits and develop new ones; you may not be able to figure it out all at once. So take it one step at a time, and the long-term benefits will be worth it.
Want to learn about expert insight on financial concepts? Check out my thoughts on other areas of personal finance:
- Finance for women.
- Overcoming the fear of spending money.
