We’re all guilty of overspending, and most of the time, we only realize it when it’s too late — when we’re faced with a large credit card debt and no savings to draw on in a time of need.
In this guide, I’ll share some of the best habits of people who never overspend so you can adapt them to your own finances!
1. Track Every Penny
Small expenses can sneak up on you and accumulate fast.
Common instances include the seemingly harmless purchase of coffee or the decision to “buy” on-sale items you don’t actually need.
One way to avoid this financial drain is by tracking every penny you spend.
It’s also best to give yourself a monthly spending allowance. Decide on a set amount for those little indulgences each month and stick to it.
Make sure to keep an eye on this allowance and adjust your spending habits accordingly.
Need a budgeting framework? Consider the 50/20/30 rule. Allocate 50% of your income to your basic needs like food, housing, and utilities.
Dedicate 20% to savings and debt, including essentials like retirement and emergency funds. Then, enjoy 30% guilt-free for discretionary spending.
2. Unsubscribe and Unfollow
Hitting “unsubscribe” on emails from various stores is like telling temptations to take a hike.
Those emails are designed to lure you into spending on things you probably don’t need.
And let’s talk about streaming services. Are you actually watching shows from all those streaming platforms, or are they just nibbling away at your budget every month?
Regular checks can reveal subscriptions you’ve totally forgotten about. It’s easy to sign up and then overlook, especially if it’s only a few dollars a month.
Moreover, unfollowing brands and influencers who trigger your spending urges can help. As they say, out of sight, out of mind.
This simple action can make a big difference in controlling your spending impulses.
3. Build an Emergency Fund
Creating an emergency fund isn’t about hitting a specific target.
Simply look at the difference between your income and expenses each month to see how much you can set aside.
Pro Tip: Aiming to stash away 10% of your monthly income into this fund is a smart move.
You might begin with a monthly contribution of $500 or perhaps $50. The key is consistency and making it a habit to contribute regularly.
Most importantly, treat your emergency fund like a bill that must be paid each month. That way, when life throws a curveball, you’re ready to catch it without falling into debt.
Note: Set up your bank account to automatically transfer a portion of your paycheck into savings. You won’t miss what you don’t see.
4. Declutter Your Home
If you find yourself constantly overspending, it might be time to declutter your home.
Surprisingly, getting rid of unnecessary items can help you save money in the long run.
I, for one, recently started decluttering, and it made me realize how much money I wasted on things I never used.
I found that decluttering not only created a more organized living space but also curbed my impulse to buy unnecessary things.
After all, it’s easier to make thoughtful purchasing decisions when your surroundings are coordinated.
Start small by tackling one area at a time, like a closet or a drawer. Sort items into three categories: keep, donate, or sell.
Be ruthless with what you decide to keep — only hold onto items that serve a purpose.
Note: Try the Marie Kondo approach! She’s got this “KonMari Method” that’s all about ditching stuff that doesn’t bring you joy and holding onto meaningful things. Plus, she’s got a bunch of books on the topic!
Once you’ve decluttered, avoid filling your space with more unnecessary items.
Before making a purchase, consider whether it’s something you truly need or if it will just add to the clutter.
5. Cook at Home More Often
Food takes a considerable toll on everyone’s budget, particularly when dining out becomes a habit. But here’s a secret: cooking at home can dramatically cut down those costs.
Whipping up your own dishes means you can enjoy healthier and bigger portions for less cash than dining out or ordering in.
Plus, it’s a chance to learn new skills, experiment with flavors, and even turn meal prep into a fun family activity.
Vegetables need not be boring, either. Toss them in the oven with some oil, salt, garlic, and chili powder, and you’ve got a dish that’s as delicious as it is nutritious.
Meanwhile, for a cost-effective yet hearty meal, try a simple chicken recipe.
Marinate chicken thighs (which are cheaper than breast) in a mix of olive oil, lemon juice, garlic, and herbs. Then, bake until crispy.
By making cooking at home a habit, you’re not only feeding your body, but you’re also feeding your savings account.
So, grab that apron and let the homemade meals work their magic on your budget!
6. Take Advantage of Free or Cheap Entertainment
Who says fun has to empty your wallet? Embracing free entertainment can be both thrilling and fulfilling!
For instance, trekking or going for a bike ride offers an unmatched sense of freedom.
In addition, you can visit new neighborhoods on foot, splash around in the nearest lake, or jog with your furry friends for zero cost.
Other activities you can do for free entertainment include:
- Visiting local parks for picnics or leisurely strolls
- Attending free community events like concerts or festivals
- Borrowing books, movies, or games from the library
- Exploring museums on free admission days
- Trying out DIY projects or crafting with items you already have
- Joining online forums or groups for shared hobbies or interests
- Participating in volunteer work or community service events
- Having a movie marathon at home with snacks you already bought
The next time you’re pondering weekend plans, remember the best things in life — and entertainment — are often free.
7. Embrace Secondhand Items
Thrift shops and online marketplaces are great for finding deals. You can find lots of good items from these stores, including vintage clothing and barely-used household items.
However, here’s a kicker: just because the items are secondhand doesn’t mean you should go on a spending spree.
The trick is to shop with a plan, not impulsively or because the deals seem too good to pass up.
Even at a thrift store, ask yourself if you really need the item before heading to the checkout.
This way, you save money and avoid cluttering your space with things you won’t use.
Pro Tip: Always verify the condition of secondhand goods to ensure you’re truly getting a bargain.
8. Choose Quality Over Quantity
If thrift shopping isn’t your thing, consider going for fewer high-quality items instead of a bunch of cheaper ones.
Quality purchases mean you’re less likely to need a replacement soon. It’s money-saving because you won’t have to buy the same item twice.
I once bought a cheaper blender to save money, only to have it break down after a few uses.
I ended up purchasing a more expensive, high-quality model later, which has lasted for years without a hitch.
9. Prioritize Self-Care As Well
Cutting costs doesn’t mean you have to sacrifice everything that makes you happy.
It’s about finding a balance that allows you to appreciate life without overspending.
Here’s how to prioritize yourself without going overboard:
- Allow yourself to unwind
- Take a few minutes each day to simply be present
- Prioritize sleep
- Limit screen time to improve mental health
- Practice gratitude
- Take free or low-cost online courses
- Prioritize your hobbies
Make time for yourself, cherish your experiences, and manage your money smartly while still enjoying life to the fullest!
The Psychology Behind Overspending
Understanding why we occasionally overspend can help us make smarter money decisions.
Here’s a look at the psychology behind overspending to make it simpler to recognize and control.
Instant Gratification
Everyone loves instant gratification! Whether it’s that new phone or a stylish outfit, these purchases give us a dopamine boost.
Realistically, it’s tough to resist the urge to splurge (even if it’s not the most wallet-friendly choice).
Emotional Spending
Studies show that feelings, not just needs, drive purchases.
Some shop to celebrate, while others might buy something on a bad day to feel better. This habit turns shopping into a go-to solution for managing emotions.
Credit Card Misuse
Credit cards often make spending feel less real because you’re not handing over physical cash.
This can tempt you to spend more without feeling the immediate impact.
Fear of Missing Out (FOMO)
Social media shows endless photos of fun outings and cool gadgets.
People spend to keep up, as we are afraid of being the only one without the latest or best.
Technological Advancements
Shopping has never been simpler! Just a quick tap on your phone or computer and voilà, your order is on its way to your doorstep.
Such convenience often leads to impulse buys without much thought.
Escapism
When life gets hard, shopping can feel like a little break. But remember, it’s only temporary relief, and the bills are real.
Financial Illiteracy
If you’re not familiar with budgeting or how interest rates work, you might accidentally overspend and not realize the lasting effects it can have. You also miss opportunities to grow your wealth.
Decision Fatigue
After making numerous decisions, the quality of our decision-making can decline. Unfortunately, this can lead to poorer financial choices.
In short, we overspend because it is wired into how we think and feel.
If you have pondered on the tips and facts we shared above, feel free to leave a comment below! You can also throw in your questions! Let’s keep the conversation going.
