11 THINGS TO DO TO REDUCE OVERSPENDING
No matter where or how we shop, the temptation to overspend on random stuff follows us everywhere we go! š¤
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 doesnāt matter how large or small the income isāif weāre not tracking your spending, weāll never be in control of our financial health. In fact, weāll 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 weāre wondering where all our hard-earned money went each month, itās probably high time to start tracking it! Stick with us, and weāll 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 weāve 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 š . Something inside of us cringes. Just moments before, we had money, and now, we donāt.
Letās think about it for a moment, when weāre shopping with plastic, itās easy to spend more because we donāt physically see the money right in front of us. So, the next time we make a purchase, letās try to pay in cash, and weāll able to see this in action. Plus, thereās practically no overspendingā we can only spend what we have with us!
Hereās the good news: We can overcome these overspending habits with a little planning, self-discipline, and long-term thinking.
1. Know what weāre 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 weāre 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
Weāve 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.
Letās ask ourselves: āDo I actually need this thing I want to buy? What would happen if I didnāt buy it?ā
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 canāt live without, like food. A want is something thatās 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 thereās 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?
Letās 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 weāre just buying because it's on sale?
Who doesnāt 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 itās 25% off, weāre paying 75% more than we would have. Thatās still called spending, not saving. š¤
Letās avoid these shopping traps by making a list before we go! Then, we can practice some self-discipline once weāre there. If we see an item on sale that isnāt on our list, it wasnāt meant to be!
6. Understand if itās an impulse buy
So, we had a bad day at work and that $1000 handbag weāve 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 weāre feeling bad, letās 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 thatās cheaper? Letās get those creative juices flowing and see if we can do without it.
8. See if it can wait
Letās discuss about the āJust One More Dayā 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? Letās 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? Letās 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, letās 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 doesnāt often make sense to complete the purchase. There are other ways we can get what we need for one-time use. Letās be honest about how often we are likely to use something.
11. Ask ourselves the most difficult question: Do we really even want it?
Letās 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, letās 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 weāre 50 years old, it wonāt 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.
An extraordinary success story of a person with a unique career path
Internships are a great way to stand out from the crowd