5 ways to prevent overspending
Do you see yourself as a chronic overspender?
These are people who usually start each month with great intentions of spending according to a set plan.
But they eventually find themselves making mindless purchases.
They are also likely to have “a little won’t hurt” attitude.
Unfortunately, that will lead to you facing an empty bank account and severe buyer’s remorse at the end of the month.
Once you realise you’ve spent money on things that you don’t need at all, you’re left looking for extra money. Or even worse, using your credit card to cover your bad moves. People usually overspend because of emotional issues, family upbringing and even lifestyle inflation. And it isn’t always easy to see or recognise your negative spending patterns. Therefore, you need to take some time to check your behaviour. From that, you can decide whether you’re overspending each month and why.
Here are a few things you can do to make sure you don’t overspend.
Plan ahead
This can’t be stressed enough. It’s important to plan and know exactly what you need and want. The most common reason for overspending is because you don’t really know what you need. So, that means you should take a look at your needs and make a list. The last thing you want is for a quick run into the grocery store to turn into a big bag of nice-to-haves. You should plan as many of your purchases as possible. Planning ahead will make a massive difference to how and on what you spend your money.
Set a budget
Taking a look at your income and expenses should be done on a monthly basis. Seeing how much you’re actually spending on clothes and other non-essentials can be a major wake-up call. So, start off by creating a spreadsheet to categorise different expenses and types of income. Make sure you add everything to the spreadsheet. Any type of income and expenses should be listed, whether small or big. Remember to list your various spending too. From entertainment and clothing to groceries and petrol, allocate funds to each spending category. Don’t forget to put some money in your long- and short-term savings account too.
Set short-term financial goals
One of the best ways to prevent overspending is to set realistic and attainable goals. Setting these short-term financial goals is a great way to stay motivated as you alter your spending habits. For instance, if you applied for a personal loan online, a short-term goal would be to pay back all the money within a specific time. These goals are there to constantly remind you of the reasons you’re cutting back on expenses and making a few sacrifices. Make sure your goals are SMART (specific, measurable, attainable, realistic and can be achieved within a specific time).
Use cash instead of card
This will take a lot of dedication as everyone these days make use of their cards. If they pay at the petrol station, they use a card. Paying for the groceries, they use a card. Buying new clothes, they use a card again. So, it can be quite difficult to get rid of that habit. But when you eventually switch to a cash-only budgeting system, you’re basically forcing yourself to stick to a plan. And this is a good thing. When you run out of money, you’re done spending. So, get a few envelopes or bank bags for all your various expenses. Label each one according to how much you’ve allocated in your budget. That way you’ll only spend what’s really needed. Making use of your card too many times could desensitise you to the money you’re spending every single time you swipe. So, if you want to prevent that, keep cash handy. Besides, it’ll hurt more and feel like real money when you hand out those notes.
Track your spending
All those purchases you make throughout the month will add up. And by the time the end of the month rolls around, you can be facing a dwindling bank account and severe buyer’s remorse. It’s important to track your expenses. That’s basically the key to successful budgeting. It’ll keep you accountable for every rand you’re spending. If you know where your money’s going, you’re likely to make smarter spending choices. You’ll also identify areas you can cut back in. Along with your budget, you should take a look at your bank statement every month. That will give you more clarity about where exactly your money is going.
The power is in your hands. You’re the one with the money and can decide whether you’re going to spend everything or save it instead. Start by taking note of these five tips to prevent overspending. If you do this on a regular basis, it’ll soon become a habit. Remember to make your money work for you and not the other way around.