How to stop overspending?
A dear friend of mine approached me for help in regard to this specific concern because she happened to overspend money on her birthday that she was out of dough and was at the risk of not making her upcoming rent payment.
At some point in time, most people will find themselves in a similar situation. I myself have learned a valuable lesson when it comes to keeping our priorities in terms of where our money goes.
I am not an over-spender by any means when it comes to my personal finance but I tend to be more aggressive whenever I’m spending for business, thinking that I would recoup the money anyway, but overspending, even in business isn’t a good idea because what we think is a calculated risk may have not been calculated effectively which results to business setbacks that could extend to one’s personal finance.
So whether it’s a “business” or a personal expense, overspending isn’t a good idea and won’t give you the future that you desire.
Money, like everything in life, comes… and goes and the challenge for most people is keeping a portion of what they make on a monthly basis.
If you’ve ever overspent in your life, you may be aware of how easy it is to burn a month’s earning in a night or two.
Years ago, back to when I was just starting out on my career and freshly out of the university, I’ve had this buddy of mine who burns his bi-weekly pay in three days or so that he has to borrow money for his cost of living in the next two weeks.
He was one who would call himself a “one day millionaire” and would spend all his earnings on drinking sprees because he believed that he was ” an alcoholic” at such a young age.
I know, stupid, right?
If you’re young and reading this, I hope you’re not making the same mistakes.
What I’ve observed in my 20 years of adulthood, most people overspend to support a lifestyle of choice or simply on shopping sprees or expensive hobbies, which again, boils down to lifestyle choice.
The Root Cause of Overspending
The number one cause of overspending is consumerism.
Sadly most of us have been programmed to consume right at the time we were just learning how to walk.
And there are a lot of unnecessary things that people spend on because they think they needed them at the time of purchase.
But then, come to think about it, most of the things that you’ve bought in the past, you don’t actually really need. Most of them lays untouched for years on storage or basement, never to be touched again.
If you’re somewhere around my age, you’d remember that most parents from the 80s would buy their kids’ new bags, clothes, shoes, and school supplies each school year even when our school bags are still in good shape.
There was always the need to “wear” or “own” something new and the need to prove that “I can afford it” was always there.
That’s consumerism in action!
Virtually every one of us including our parents, grandparents, and forefathers (if you may) have been “programmed to consume”.
If you grew up in a home where the TV was always on; people who sit in front of that thing are programmed most hours of their waking time.
I grew up in such a home that I have to re-educate myself to reprogram my belief system.
The news, TV shows, soap operas and especially advertisements were all meant to program the masses to consume, to buy, to own!
Toys… Lots and Lots of Toys
Most kids grew up with humongous amounts of toys; toys that were usually only played once or twice and stored in the basement, attic, or a closet, never to be played again.
Well, some kids do open them once in a while during “special occasions” but the truth of the matter is most toys were left to collect dust and yet kids kept on asking for more.
And the parents will keep on buying more because “they’re only kids once”.
But also because there is the “need to keep up with the Jones’s”.
Of course, none of our parents would ever admit to having succumbed to this belief but they did!
That’s why you always had new clothes!
And that’s why you always demanded more or that branded shoes or that shiny new purse when you were in high-school!
Because you’ve been programmed to consume…
Most of us feel “well off” or “rich” when we have “new toys” and sadly these new toys become “old” before we know it and we would want “new” each time the new becomes old.
Now, most of us grew up and gets old in terms of numbers (age) but most never really move on from the need of consuming “toys” that we end up buying things we think are assets but are merely toys to satisfy our need for consumerism.
Stop buying toys!
How to Stop Overspending on Unnecessary Things
“Spend less than what you make”
That’s the simplest answer to address this question. So simple, yet it’s just so freaking hard to do for many of us, is it?
The problem, for most people, is that it’s a bit hard to track one’s money and spending; especially, in the day and age of digital currencies where most of the time, we don’t even get to hold physical cash.
We spend them by swiping our debits and credit cards and before you know it: You’ve already spent more than what you’ve made.
So, how do you stop spending on unnecessary things?
It really is tempting to buy things we don’t need especially when they are on sale.
The rule of thumb is:
“Don’t buy things you don’t need, even when they are “a good deal”!
Keep in mind that stores and brands are out there to get your money and unless you really need the stuff, you don’t really need to buy them.
The simple question you should ask yourself when faced with a decision of whether or not you should buy something is:
Will I die if I don’t buy this?
Yes, it’s not a matter of life and death situation, hold on to your hard-earned cash as if you’re life depended on it because financially, it does!
The truth of the matter is, you don’t need a lot of stuff! The more stuff you have, the more stressful it’s going to be.
Every time you ask yourself the above-quoted question and your answer is “no” then you don’t need that darn thing!
This is the best way to stop spending on unnecessary things. By making it a life and death situation, you’re amplifying to yourself the difference of a need and a want.
If you’re used to overspending, this is going to be quite a challenge and don’t think that this simple question is going to be a walk in the park because at first, you’re going to ignore this but if you consciously develop a habit of asking yourself this question every time you feel the need to spend, you will find that this simple and funny question can seriously change your financial life.
One technique that I use and one that has been effective for me over time is deferment.
If you’re strongly attracted to buying something and you’re not sure if it’s a need or simply a want; deferring the purchase decision usually helps you make a smarter buying decision.
Most of the time, you will find that most of the things that you think need, you don’t actually need.
Keep in mind that the big corporations of the world have done so much research on consumer behavior that they know exactly what to do to motivate an impulse purchase.
I defer all buying decisions by a night or two; after 24 to 72 hours of deferment and you still feel the urge to make that purchase, it means that you really like the item and may need it.
Just The Bare Necessities
In the last forty years of my existence, 20 years of it was as an adult, I’ve realized that as a human being; we don’t necessarily need a lot of stuff to be happy.
The idea of having a lot of material things to be happy is an illusion.
Materialism isn’t happiness, it has become a vice for many of us.
As adults, many of us attach the feeling of happiness to consumerism and that we have to consume and purchase things (most of which, we don’t really need) to be happy.
If you come to think of it, happiness is just a feeling, a feeling that you can often find from within you.
Have you ever watched “The Jungle Book”?
Remember the song Baloo taught Mowgli?
Yup, The Bare Necessities!
The bare necessities are the key to stop pending on unnecessary things. Focusing only on the things that you really need will minimize the strain on your pocket and on your sanity.
I quite like the ending of the song which states the following:
Look for the bare necessities
The simple bare necessities
Forget about your worries and your strife
I mean the bare necessities
That’s why a bear can rest at ease
With just the bare necessities of life
With just the bare necessities of life!
If you stick to the bare necessities, you will not overspend on unnecessary things and you can rest at ease with just the bare necessities of life!
Consumerism has such a strong drag that it’s really hard to fight it. We’ve all grown into it as everyone’s basically programmed to spend on things, it’s just part of the whole economic ecosystem that’s why very few people become wealthy because you are to spend your money on things and experiences the moment you start earning money.
When we were just getting started our new life in a new country, my wife and I agreed that we were going to stick to the basics, which means that we’re only going to buy the bare necessities to maintain our household and family’s needs; no bells and whistles, just the basics!
It’s hard to migrate to a new country and it’s even harder when you try to keep up with the Jones’s.
If you’re in a situation where you have a lot of crap from years and years of spending, turn the things you don’t need into cash!
If you’re in the US, sell them off in Craigslist and if you’re in Canada, snap and post your junk on kijiji or better yet, post them on the Facebook Marketplace!
Sure, you’re going to lose when you sell them as most of your stuff will be classified as “used” but then you’re going to be able to free up some space in your home and in your life, which leads to less stress and a little bit of money.
Keeping in Check with Reality
If you’re a student or an office clerk, keep your desires and “necessities” at par or (hopefully) below your actual spending power.
Many of us are “one day millionaires” when we have money in our pockets and we quickly become paupers a couple of days after we receive our paychecks.
People tend to overestimate their spending power.
Again, this is because a lot of people are “programmed” to consume; we just can’t deny the fact that we were (almost all) programmed to spend the money that we earn and most of the time, most people spend more than what they make.
We tend to mimic the lifestyle of the rich and famous. Know yourself, know who you truly are; this way, you don’t have to mimic your favorite celebrities’ lifestyle because while they can afford it, you may drive yourself to bankruptcy by keeping up with them.
Spend less than what you make!
Keep Track of Your Cash Flow
Treat your financial life like a business. Businesses thrive and fail by effectively managing and tracking their cashflows.
As an individual, your finances will go green or red depending on how you manage and track your personal cash flow.
Budgeting was such a hard task for many of us!
Manually tracking our income and expense in an excel sheet is just too difficult to keep up with.
Nowadays, there is a humongous supply of budget apps that can help you automatically manage and keep track of your spending as well as monitor the inflow of your money.
Meet Cleo is one such app and is noteworthy if you’re looking for some help in automating your budgeting.
It connects to your bank, works on the background thereby helping you control your spending.
Meet Cleo is your AI pal that looks after your money. It helps you budget, save, and track your spending.
You can ask Cleo anything from ‘what’s my balance’ to ‘can I afford a coffee’, and she’ll do the calculations instantly. Drill down with personalized updates, graphs, and data-driven insights.
Check out the Meet Cleo app here. You can open up an account in under two minutes for free. (US only offer)
There you have it! Tips and tricks on how to stop overspending on unnecessary things.
If you like this article and you think this may benefit someone else who may be in the same situation as you or who is trying to find some answers on how they can stop overspending on unnecessary things, please don’t hesitate to share this on your social media account.
If on the other hand, you think I missed some valuable tips that can help others in solving this problem, please don’t hesitate to share your 2 cents in the comment form below.