In our recent blog recognizing National Savings Day, which was on October 12, we offered tips to help you save more money. A key to saving money, of course, is avoiding overspending.
While it’s often easy to come up with justifications for overspending, the fact is there are a few common reasons why most people tend to overspend. Here are five of those reasons along with some tips to help you spend less:
- Not wanting to miss out on a “deal” — Who doesn’t love getting a great deal? But sometimes a “deal” isn’t what it seems to be. Some retailers are adept at making things look like deals that maybe really aren’t. For example, they sometimes raise the suggested retail price from what it would normally be and then mark this down to make it look like shoppers are getting a better deal than they really are.
Also, it’s not always a great deal if you buy something you don’t really need just because it’s on sale. To avoid these overspending traps, make a list when you go shopping and stick to it. This will help you avoid the temptation of overspending on things you don’t really need just because you think you’re getting a good deal.
- Giving in to peer pressure — Also sometimes referred to as “keeping up with the Joneses,” this is the temptation to overspend in an effort to look like you’re living the same lifestyle as those around you. It can manifest itself in many different ways, such as driving luxury automobiles; living in a large house in an upscale neighborhood; going on expensive, exotic vacations; and eating out at fancy, high-end restaurants.
Resisting peer pressure when it comes to overspending requires adopting a mindset that you won’t compare your lifestyle, leisure activities and possessions with those of your friends and acquaintances. It also requires being content and thankful for what you possess, rather than coveting what other people have. While this can sometimes be difficult, it’s critical to avoiding overspending for many people.
- Getting carried away with gift giving — For many people, it really is better to give than to receive. They take tremendous joy in giving gifts to people they love and care about. However, the danger lies in letting emotions overrule practicality when it comes to gift-giving, which can lead to irresponsible overspending.
To avoid this pitfall, set a limit before you go shopping for gifts and then stick to it. This is especially critical during the holidays, which is when many people do the bulk of their annual gift-giving. Start by setting a limit for what you’ll spend on all of your holiday gifts. Then you can set individual limits for each person on your list, being careful not to overspend and exceed your total gift-giving limit.
- Shopping while exhausted — When you’re tired, it can be harder to resist the urge to splurge on impulse items, which can result in overspending. This is especially true at the grocery store: Shopping while tired and hungry can lead to buying all kinds of things that look appetizing but don’t add have nutritional value and end up being not only unhealthy, but a waste of money.
Whenever possible, try to do your shopping in the morning while you’re well-rested, and only after eating a meal. If you’re feeling tired — either physically or mentally— and/or hungry, put off your shopping trip until you’ve had a chance to recharge your batteries.
- Not having a budget — Some people bristle at the mention of the “B” word, but living by a household budget is probably the best way to avoid overspending. Setting a budget is easier than many people think it is.
Start by writing down all of your recurring monthly expenses — everything from your mortgage or rent to your utilities, car insurance, cell phone bill and gasoline. Next, add an amount for discretionary expenses like entertainment and eating out. Then write down your total monthly income and compare this to your total expenses.
If your income exceeds your expenses, congratulations! You’re living within your budget and can devote your excess cash to savings. But if your expenses exceed your income, you’re probably overspending in one or more areas. Scrutinize your budget to figure out where you can cut expenses in order to bring your budget into balance.
Please contact us if you’d like help when it comes to overspending. We can work with you to create a household budget that helps you keep your spending in line.