How To Stop The Overspending Habit

Spending money is easy. Sometimes, paying it back when the bill arrives isn’t. Statistics show that Americans spend $1.33 for every $1 earned and that nearly 40 percent of low- and middle-income households carry about $7,100 in monthly credit card debt.

americans in debt

College expenses and medical bills are often to blame. But so is overspending – buying beyond what you can afford – usually on feel-good things like entertainment, high mortgages, cars and retail items.

If you’re caught in a buy-now-pay-later cycle, now might be a good time to get honest about your spending, pay off your current debt, and rethink your future spending habits. 

“It Makes Me Feel Good”

Take a close, honest look at why you might be overspending. Spending more than you can afford is often a knee-jerk reaction to boredom, stress, low self-esteem and other unpleasant feelings.

bored buying

Enjoy the Frugal Life

One way to scratch the itch is to include more fun in your life – frugal fun. Instead of spending money you don’t have, on stuff you probably don’t need, spend more time with family, friends and participate in activities that will bring true joy to your life. Sounds simple but research continually shows that the happiness and satisfaction felt from making a material purchase pales in comparison to the positive feelings a little low-cost, meaningful fun can provide. Give it a try.

Another way to escape the lure of overspending is to stop muddying the difference between wants and needs. If you want to find out what’s driving all the money out of your wallet, sit down and make a need versus want list. Wants can feel a lot like needs. Transportation and clothing are essential needs but keeping a high-end vehicle in the garage and wearing last year’s designer sweaters probably fall into the want category – especially if you’re still paying for them.

When you do shop, leave the credit cards at home, and pay with cash. It’s easier to overspend with plastic. Real money in your hand makes overspending less likely. If a want still bends your ear, try delaying the purchase. Experts say the urge to splurge is likely to pass if you just wait 10 minutes. And if online shopping is your inclination, try this quirky tip from DePaul University: Freeze your credit cards in a glass of water the next time you feel tempted to spend. By the time they thaw, you might feel differently about how badly you “need” the item. It's also a good idea not to keep your credit card information on record with retailers. 

useful credit cards

Overspending on Needs

Credit cards are useful for buying what you need when cash flow is low – things like auto and home repairs or even pleasurable stuff like vacations or gifts that you know you can comfortably pay off in a reasonable amount of time (90 days or less). On the other hand, if you’re reaching for credit cards to purchase everyday living essentials like groceries, gas and other items, yet still have trouble paying for them when the bill arrives, getting some professional advice might be a good idea.

Habits can be hard to break, which is why credit counseling can be very helpful. A credit counselor will help you understand your financial situation more clearly and come up with a plan to reduce your debt and curb your spending.

Living within your means – changing your relationship with money – is the best way to find lasting freedom from debt. Go for it!