Did you know that one of the top three reasons for overspending is making purchases with a credit card or digital wallet? This means that something as simple as switching over to cash could completely curb your compulsive overspending.
If you’re concerned about your spending habits and you’re ready to step up your financial game, keep reading for five ways to curb overspending.
1. Set a Budget
What causes overspending? Well, that depends on a lot of factors. But one thing is certain — creating a budget is one great way to stop overspending.
Think of your budget as a roadmap for spending that determines what you earn versus how you spend. You can allocate a set amount of money for categories of expenses such as ‘rent’, ‘bills’, ‘entertainment’.
Prioritize your categories and make adjustments as needed in the first few months.
2. Track Your Expenses
By tracking your expenses you’ll give yourself a big wake-up call. You can see exactly where you’re spending too much money or even compulsively overspending.
You need to be able to account for the money you spend before you can think about creating a budget or how to control overspending.
3. Use Cash Instead of Card
This is one of the most effective tips to stop overspending. Using a card makes it too easy to spend money without understanding how much you’re spending and it makes it difficult to track your expenses.
If you have a set amount of cash for a day or for a certain category, you have a physical limitation to how much you can spend. Using cash is a good way to stop overspending immediately. Leave your cards at home and you’ll have no option but to be conscientious about how you spend your money.
4. Set Financial Goals
Having goals to work towards helps to motivate you to curb spending. Think about your long-term and short-term financial goals and what you need to do to achieve them.
Perhaps you want to buy a house in the next couple of years, pay off student debt or simply have a certain amount of money saved. Creating something solid to work towards gives you the encouragement you need to stop overspending.
Ask yourself the question, “what is financial wellness to me, and how do I achieve it?”
5. Set Up Sinking Funds
Think of sinking funds as mini-saving funds that you can create to help you save for future expenses. Perhaps you want to add $20 a month to your ‘Christmas gift’ sinking fund, or a once-off payment to your ‘visit the dentist’ fund.
By setting aside this money early on, you’ll avoid overspending when the time comes to pay for these things.
How Are You Going to Stop Overspending?
Which one of these methods are you going to employ to curb your overspending? Or are you going to give all five a try? Setting up a budget is one of the best long-term tips for financial management. But if you want to stop overspending now, then ditch your cards and switch to cash.
Did you find this post helpful? Keep exploring our site for more tips on managing finances and living your best life!