In a world filled with a barrage of marketing messages and the societal pressure to chase the latest trends, overspending is a common challenge for many people. The number of people living paycheck to paycheck has shot up as inflation continues the upward swing. Overspending involves spending in excess of what you can afford.
The problem of overspending can lead to financial hardship and instability. Studies have shown that individuals who overspend have more unsecured debt, leaving them exposed to economic shocks like salary reduction or job loss. Luckily, there are effective and practical ways to curb overspending and have control over your financial behavior.
Reasons Why People Overspend
The tendency to overspend is not just a breakdown in financial judgment, but it also has underlying psychological and emotional elements. Overspending primarily occurs due to consumerism, which is characterized by the obsession to acquire things in large quantities, even though you can’t afford them. The desire to spend is further propelled by poor financial planning.
Over time, psychological forces influence your spending habits and cause you to make irrational buying decisions. According to experts, your brain creates a reward system after shopping that motivates you to buy the product again. Whenever you’re thinking about shopping, the brain releases dopamine, a neurotransmitter that pushes you to pursue happiness.
Emotions also influence individuals’ spending habits. Compulsive buying occurs when feeling happy or stressed. Marketers and advertisers apply multiple techniques to trigger your emotions, thus encouraging you to purchase their goods or services.
What’s the Solution
If you struggle with overspending, you can regain control of your spending habits by making adjustments in your life. Here are some effective ways to curb the habit of overspending.
1. Find out why
The first step to improving your spending behavior is to determine why you overspend. You’ll need to jot down your daily purchases to help you identify spending patterns. Ask a family member or a friend to provide insights about your spending behavior.
2. Set specific and achievable financial goals
According to financial experts, having specific, achievable, and measurable financial goals may help you to prioritize your spending. Setting goals also allows you to make better decisions about savings and investment. It’s a good idea to always start your financial journey with specific goals as a means to avoid unnecessary expenses.
3. Create a budget and stick to it
Creating a personalized budget helps you track your spending behaviors and determine the areas where you can cut back. Budgeting gives you better financial control and helps you to allocate funds toward your goals. Don’t create a budget and have no commitment to it. Stick to your budget to achieve optimal control of your spending behavior.
Related: How to Create a Budget in 5 Simple Steps
4. Always shop with a list
Before you go shopping, make a list of the items you want to purchase. Preparing a shopping list beforehand helps you to avoid impulse purchases and to focus on the items you need. Don’t buy anything that is not on the list. Avoid mindlessly browsing online sales to prevent purchasing items you don’t need.
5. Use cash and avoid using credit cards or mobile
Research has shown that people who use credit cards or mobile payments are more likely to show overspending habits. Thus, carry cash only when going shopping. With this strategy, you’ll find it difficult to overspend.
6. Eliminate temptation
You are more likely to make unplanned purchases when you’re exposed to temptations. To avoid triggers of impulsive buying, avoid exposure to advertisements and marketing messages by using an ad blocker in your browser. Unfollow friends or pages on social media posting about things you don’t need. Keep your social media in check if you struggle with the desire to compete with others.
7. Psychological interventions
Compulsive buying habits cannot be addressed by tips from financial advisors alone. It’s also a good idea to seek professional help to address the psychological elements of overspending. Psychological interventions for adults struggling with overspending focus on reducing credit card overspending and facilitating proper money management.
