What are the top three reasons you tend to overspend?
Overspending is a big challenge for many of us, especially when we spend mindlessly. We believe we can afford a certain lifestyle, but when our eyes get too big for our wallets, we continuously give in to impulsiveness without considering the consequences.
In episode 55 of The Abundant Living Podcast, we discuss effective strategies to overcome overspending.
If your spending habits have you wondering where your money went before the next payday, maybe it’s time for a change. Unfortunately, the feeling of living paycheck to paycheck results from not knowing where your money is going, especially if you do it over and over. It causes a lot of undue stress that can negatively affect your health and pocketbook.
However, you can reduce this stress and get back on track with your finances by altering your spending habits.
How will you do it?
Try these budgeting techniques:
Make a Master List. Develop a list of all your loan payments and credit card bills. You’ll expand your awareness about the number of creditors you have, the total amount you owe, and the due dates of your monthly payments. On the list, have 5 columns: the name of the creditor, your monthly payment, the due date of each month’s payment, the amount of interest you’re charged, and the total amount you owe.
Add other monthly expenditures to your Master List. Next, list things like your rent or mortgage payment, grocery costs, gasoline costs, and anything else you pay monthly. Estimate the amounts for your cable, water, garbage, cell phone, and utility bills using last month’s statements. Your Master List should reflect all your outgoing expenditures.
Establish priorities. Which bills do you see as the most important? Mark them in some way by highlighting or circling them.
Survey the remaining bills. In looking at these non-priority bills, you can most likely discover some areas in which you can lower your costs.
Examine non-value expenditures. Are you spending $30 a week on Uber Eats, but you know it’s affecting your fitness goals? Do you stop after work for drinks with co-workers two or three days a week when you’d rather be home reading a book? If so, consider the amount of money you spend on these activities you do not value. Which expenditures can you reduce? Which can you cut out completely, at least for a three-month period? Create a budget to spend money on what you value.
Call your credit card companies to request lower interest rates. This is pretty tricky now in the current economic environment, but if you have a good credit score and a long relationship with the credit card company, GO FOR THE ASK! Make a notation on your Master List of the reduced rates you receive. Also, note any companies that refuse to reduce your rates. Make the decision to stop using credit cards with high-interest rates.
Take decisive steps to reduce your expenses. For example, if you’re paying $180 a month for premium cable channels, you have the power to cut your cable bill simply by picking up the phone and calling the cable company.
Determine how you can bring in additional dollars. Consider a second job. Then, use the extra money you earn to pay off debts. Recognize you have the power to change things.
Keep your Master List with you throughout the day. Each time you’re about to make a purchase, glance at the list and reflect on your bills. Ask yourself if you truly need what you’re about to purchase. Allow yourself to feel proud about this new routine.
Record your thoughts and feelings about the changes you’re making. It’s a challenge to try to change something about yourself, and how you manage your finances is no different. Write down how you’re feeling about adjusting your spending habits. Be optimistic that you can and will change your financial situation.
If you consistently live paycheck to paycheck, commit to following these strategies to change your behaviors. You have the choice to alter your financial habits in powerful ways. You can do it!
ABOUT THE AUTHORS
Weslia Echols, AFC®, and Willa Williams, AFC® are the co-founders of Trinity Financial Coaching and the cohosts of The Abundant Living Podcast.
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