Ways to Stop Overspending Now. Part 1.

Do you ever look at your bank account and wonder, “Where did it all go?”

There are probably as many reasons why we overspend as there are reasons why we shouldn’t. The first step in changing our behavior is to recognize the triggers and to consciously confront them when we’re tempted to give in. But if we truly want to overcome overspending in the long run, it’s also important to examine the more deep-seated reasons why we do it.

Here are common underlying causes for overspending and how to overcome them.

1. You’re Using Plastic

There is something about taking a debit or credit card out of our wallet that is so much easier and less painful than counting multiple bills. The downside of carrying cards is the ease with which you can overspend. The pain of seeing your funds diminish when you hand over cash actually acts an effective barrier to overspending.

The Fix: Try using cash only for a week. Hit the ATM on Sunday and take out the amount of money you feel comfortable spending that week on everyday purchases. Put it in an envelope, and use that as your ATM for the week. That’s a guaranteed way to avoid busting your budget. If you overspend one day, you’ll have to compensate for it the next. After a week of using cash, you’ll have a much better sense of what you’re spending every day and what’s really worth the money.

 2. Your Lifestyle’s Bigger Than Your Budget.

If you suddenly encounter a financial hardship or additional expense, it’s often hard to give up the lifestyle you’ve been accustomed to or to cut back, even if staying the course means racking up more debt.

As South Africans, we grow up expecting our earnings and our lifestyle to continue to improve throughout our lives, but that’s not always the case. Expenses and earnings can fluctuate throughout our lives, as the economy does. If we don’t adjust accordingly, we can end up in worse shape financially.

The Fix: A little preparation goes a long way. If you make a point of consistently living below your means during good and bad times, and make sure you have at least six months of savings set aside, you’ll have a cushion if your expenses jump (with a new baby, say, or a long-term illness) or your income drops. One easy way to learn to live on less and build up your savings: Set up an automatic transfer into a savings account that you don’t touch until, or unless, you need it. After a few paychecks, you won’t even notice it’s gone and won’t look at it as money to spend.

3. Childhood

Many people who grew up poor may feel the urge to overspend to compensate for feeling deprived as a child or to make it seem like they are breaking the poverty cycle (even if, in reality, they’re hurting their own finances by doing it).

Similarly, many people who grow up in affluent families feel compelled to spend money to maintain the lifestyle they grew up with even if they don’t have the income to do it.

And regardless of class, there’s a tendency to repeat the bad money habits we observed in our parents as they’re often our only financial role models.

The Fix: If you lacked good financial role models or advice as a kid, seek them out as an adult. You don’t need to look any further than your local library or bookstore to find inspiring and instructive stories. Some of our favorite picks: “Rich Dad, Poor Dad,” “Your Money or Your Life,” “The Millionaire Next Door,” and “Secrets of the Millionaire Mind.”

4. You’re Trying to Keep Up Appearances

Some people live according to their presumed expectations of others and try to maintain an image that they think they “should” have. The irony of “keeping up with the Joneses” is that the Jones family is probably trying to keep up with you, too, so you both perpetuate the cycle of overspending.

The Fix: Focus on your goals, rather than your neighbors. Take some time alone to think about what’s most important to you — what you want to have in your life (independent of what your peers may have). Once you’ve identified your goals and what you’ll need to get there, keep them front of mind (it may sound corny, but visual reminders help). When you’re saving money for something that’s important to you, what your neighbors are doing with theirs will seem less important.

By Jocelyn Black Hodes