Does your money feel a little bit out of control? Or maybe you just need to touch-up your spending habits? Do you spend more than you earn? Thanks to the e-commerce evolution, there are no physical barriers to spending. With just one click, you can get access to everything you need. Thus, the tendency to overspend, especially online, is more prominent now compared to the past when you had to leave the comfort of your home to make purchases. Today, it is uber-convenient to order.
I can shop for groceries from the comfort of my home and have them delivered in minutes. The same applies to clothing, shoes, home décor, gadgets, and devices. Most of the time, I could be scrolling through social media only to stumble upon gigantic sales and offers that are hard to resist.
Barely two days ago, I stumbled upon a 50% off sale on a set of pricy earrings that I thought my daughter would love. I bought them. But did she need them, considering we can only find one piece of the pair right now?
No matter how you shop, spending money on random stuff is always a temptation. Hence, whether it is to save for a down payment on a house, college, retirement, or vacation, there are many reasons why you may want to control your spending.
Signs that you need to control your spending
The first step toward controlling your spending is recognizing that you have a problem. Possible signs that you have a spending problem include:
Carrying too much debt: An early sign that you have a spending problem is when you keep piling up debt.
A low credit score: Some factors that affect your credit score include missing payments, using too much available credit, and defaulting on accounts.
You cannot afford everyday essentials because you run out of money before your next payday.
Spending more than you earn
Inability to stick to your budget: Have you tried budgeting to control overspending, but it isn’t working? One reason for this could be that you have a spending problem.
Having a negative net worth means that your liabilities exceed your assets
Allowing bills to fall due because you need the necessary funds to pay all of them when required.
How to control spending
Some of the common strategies to control your spending include:
Get to know your spending triggers
How often do you indulge in impulse buying? When you see something you like, do you tend to buy it, or do you take time to determine whether or not you ‘really’ need it and have the money to afford it?
A ‘spending trigger’ is a feeling or situation that makes breaking your spending rules easy. Make a list to help you understand what triggers your impulse to spend. Some triggers include:
Shopping to feel better: Some people spend too much when they feel lonely, sad, and depressed in pursuit of retail theraphy. Retail theraphy allows you to substitute a positive feeling of getting what you want for negative emotions.
However, the mood boost is only temporary. Pursuing it may lead to a vicious cycle that will make you feel worse, especially when you struggle to pay bills because you have insufficient funds. Money can’t buy happiness. Thus, it makes more sense to try and address the underlying cause of your negative emotions to help you gain control over your finances.
Social media: I have a love-hate relationship with social media. While it helps me catch up with friends, it has its downside. Picture this, you are scrolling through your news feed, and before you know it, you are bombarded with ads for that life-changing fitness stepper that you have been thinking about getting for a while. Before you know it, you have spent $200, and life feels complete. For now!
Lack of awareness: If you know what makes you spend more, you will likely avoid it.
Playing with plastic: If you haven’t noticed it already, you probably spend more paying with your credit or debit card. Unfortunately, you are more likely to spend more when you don’t physically see the money leaving your hand.
Track your spending to identify areas of wasteful spending
Increasing spending awareness is the key to exercising restraint; if you’re not tracking your spending, you’ll never be in control of your money.
Sometimes people aren’t aware of how much they truly spend. However, by tracking expenses, you will know where your money goes and areas of wasteful spending that you can cut off. For example, most people have costly subscriptions for streaming services, gym memberships, and magazines, yet they rarely use them. Tracking expenses will highlight this anomaly, and canceling them will give you more money to save.
Create a budget that works for you
Making and sticking to a budget will help you get out of debt and stay out of debt. A budget provides a simple way for you to tell every dollar you earn where to go.
There are different budgeting principles to follow. For example, the zero-based budget ensures your income minus expenses equals zero. My favorite kind of budget is, however, one that follows the 50/30/20 rule. It allows you to allocate 50% of your total income to living expenses, 30% to wants, including entertainment, and 20% to savings to pay off debt. Since I love traveling, this budget provides an ideal way to save since I can allocate all my ‘wants money’ towards saving for a trip of my choice.
Use psychological tricks
There are several psychological tricks you can use to help you control your spending. These include:
Paying expenses with cash instead of credit: A year ago, I stumbled on the ‘personal finance’ side of TikTok. I have always known about the cash envelope budgeting system, where you use cash and envelopes to organize your budget. The video showed me the practical side of it.
This TikToker creates budget categories using a specially divided wallet, with a designated envelope for each item, including groceries, eating out, and car expenses. She then places the allotted money for each item into each envelope. You make cash payments for every purchase with money from its respective envelop. Spending in that category stops when you deplete the cash in the envelope.
I found this so fascinating that I incorporated this system to help me manage household expenses. Not into using cash? Start categorizing your expenses with a money tracking app, like Nav.it.
Other ways to avoid spending
Avoid sales: Just because it’s on sale doesn’t mean you need it. Deals excite you about spending; you will often find yourself spending more than intended on sales.
Use a shopping list every time you go grocery shopping because it lets you plan purchases.
Unsubscribe from vendor mailing lists that urge you to spend money. Vendors such as Amazon, Uber Eats, and Costco will always email you amazing offers that may be tempting to resist.
Limit the time you spend on social media.
Delete shopping apps from your mobile phone since they make it too easy to spend money.
Set realistic financial goals so that you have something to work towards.
Try a spending fast
Take some time, maybe once or twice a week, and commit to buying nothing but the essentials. If you don’t need it, you don’t purchase it. This approach will likely translate to less eating out, less spending on books and entertainment, no new clothes (unless needed for growing children), and no optional home décor. It will also help reset your sense of what’s “necessary” spending saving you money in the long run.
Get financial help if you need it
Are you struggling to stick to the strategies you have put in place? Consider getting professional help from financial advisors or coaches. They will help you develop better spending habits, create a workable budget and address any other financial issues.
How to control your spending
The starting point in controlling spending is knowing where your money goes and the emotions behind every purchase. Self-awareness will help you form new habits. However, it takes time and commitment to stop overspending and develop new habits. So, don’t be hard on yourself when you make mistakes. Learn from them and keep trying until you get it right.
Nyamonaa Agata is a content writer specializing in creating value-based, search-engine-optimized content for informational and marketing purposes. With over five years in the banking and financial services industry and an MBA, she has an extensive background in writing on personal finance, investment, fintech, B2B, and B2C topics