How to stop overspending like a boss

No matter where or how we shop, the temptation to overspend on random stuff follows us everywhere we go! 🤑

Today, let's take a look at how we can stop overspending our hard earned money. Let's get started by discussing the reasons why so many have started overspending nowadays:

1. Social media

Social media badly influences us to jump on the bandwagon, to buy everything that's the current craze,

to look cool, without considering: will it really make us happy and do we really need it? It makes us compare ourselves with others- if other people have it, we want it too. All of these things will just drain our budget, steal from those future financial goals and eventually steal our real happiness and financial security.

2. Not tracking spending

It doesn’t matter how large or small the income is—if we’re not tracking your spending, we’ll never be in control of our financial health. In fact, we’ll always feel like money owns us, not the other way around! At times, we just keep spending without keeping a track of where are we spending it in reality. If we’re wondering where all our hard-earned money went each month, it’s probably high time to start tracking it! Stick with us, and we’ll show you how.

3. Shopping to feel better

Some people like to joke about being a shopaholic, but compulsive spending, also known as retail therapy, is a real thing. For most of us, spending impulsively just because we want it now, is the problem. We see something and buy it even before considering it's worth.

4. Paying with plastic

Maybe we’ve already noticed, we spend more when paying with plastic. When we spend with cash, we feel it. We feel those crisp notes leave our hand, and it hurts 😅. Something inside of us cringes. Just moments before, we had money, and now, we don’t.

Let’s think about it for a moment, when we’re shopping with plastic, it’s easy to spend more because we don’t physically see the money right in front of us. So, the next time we make a purchase, let’s try to pay in cash, and we’ll able to see this in action. Plus, there’s practically no overspending— we can only spend what we have with us!

Here’s the good news: We can overcome these overspending habits with a little planning, self-discipline, and long-term thinking.

11 ways to really stop overspending

1. Know what we’re spending money on

Making and sticking to a budget every single month will help us. If this is our first time budgeting, we might be surprised by how much money we’re spending each week or even each month on little things, like coffee, lunch or snacks.

When we make our first budget, we need to make sure our basic needs are covered. Some of these are:

1. Food
2. Utilities
3. Shelter/Accomodation
4. Transportation

While these are the necessities, making a proper budget can also offer an opportunity to cut back on the extras.

2. Shop with a goal in mind

We’ve all been there. When you run out of shampoo and toothpaste. So, with those two items in mind, you hit the store. But as soon as you walk through the door, you feel the gravitational pull to fill your basket. Think about it - that do you really need that extra item, is it worth to buy now?

3. Analyze if we really need it

He who buys what he doesn't need steals from himself.

Let’s ask ourselves: ‘Do I actually need this thing I want to buy? What would happen if I didn’t buy it?’

Being able to correctly identify a need vs. want is really important when it comes to mastering our finances. Just to review, a need is something we have to have for survival and can’t live without, like food. A want is something that’s nice to have, but not completely necessary.

In order to control our money, it is vital to differentiate between our needs and temporary desires. One can keep a 50/30/20 budget. 50% of the budget on needs, 30% on desires and 20% savings. This simple formula can be customized as per our needs!

4. Calculate how many hours do we have to work to pay for this?

This is one of the most important questions that we should ask to put things in perspective. If there’s a 20% discount on the latest mobile in the market, we can check the purchase price and split our salary by the hour. So that we have information about how many hours we have to work to buy that mobile. Is it worth buying?

Let’s think of it this way: If we were offered a new phone and told that we would have to work 500 extra hours, will we take that offer? Probably not!

5. Ask if we’re just buying because it's on sale?

Who doesn’t love a good deal? Dealers know their customers, and they also know the irresistible pull of a flamboyant (and perfectly placed) sales rack. But how much is all this saving really costing us?

If we buy a sweater we never intended to buy just because it’s 25% off, we’re paying 75% more than we would have. That’s still called spending, not saving. 🤔

Let’s avoid these shopping traps by making a list before we go! Then, we can practice some self-discipline once we’re there. If we see an item on sale that isn’t on our list, it wasn’t meant to be!

6. Understand if it’s an impulse buy

So, we had a bad day at work and that $1000 handbag we’ve been eyeing is looking pretty nice right now. We all fall into the trap of impulse buying or emotional shopping. Impulse buys are the worst kind as there is usually little thinking behind the purchase and a lot of guilt following it. Rather than just buying something when we’re feeling bad, let’s think before we spend and be sure to sleep on it. Alternatively, we can add it to the calendar 30 days from now, and if we still want the item after 30 days, maybe we can go for it.

7. Ask ourselves if we can you do without it?

Is there something else we can use? Something we already have? Or something that’s cheaper? Let’s get those creative juices flowing and see if we can do without it.

8. See if it can wait

Let’s discuss about the “Just One More Day” game. Whenever we feel we need something, we should challenge ourselves to just go one more day without the item. Sometimes we may realize that we don't actually need it. And other times, we can find out that we can come up with an alternative.

Waiting helps us rationalize and controlling our impulse buys.

9. Ask what we will do with it

What are our plans for the purchase? Let’s really think about what it will accomplish in our life. Will we be able to forward a specific goal we have? Will using the item contribute to our overall quality of life? Let’s really think about our plans for the item, and consider a realistic plan for its use.

10. Understand how often we will use it

Next, let’s determine how often we will use the item(s). If we are buying something that we are unlikely to use more than once or twice, it doesn’t often make sense to complete the purchase. There are other ways we can get what we need for one-time use. Let’s be honest about how often we are likely to use something.

11. Ask ourselves the most difficult question: Do we really even want it?

Let’s try to figure out why you want to make that purchase. Examine our motives. Do we want to buy the item because we want it? Or are we trying to impress someone? Many of us think we want something, when really what we want is to look good in front of friends/family. Before we buy something, let’s do some serious introspection. Asking ourselves questions like will these add value to our life. Or are we just purchasing high value items just to please other people?

In this materialistic world, we spend too much time, energy and money to impress other people. However, when we’re 50 years old, it won’t matter which mobile we used in college or which car we drove to office. Our financial health and well-being then will we what we will have and that is the thing that matters.