Spending money never gets old, does it? Each year, more and more Americans find themselves in debt. In 2021, the average American had $96,371 of overall personal debt, which excluded mortgages. Meanwhile, as shopping sites such as Amazon continue to dominate, the opportunities to spend have gotten increasingly attractive.
If you open your browser, you’re met with many ads offering products that fit your unique set of interests. You may find yourself caving in month after month and buying things you don’t need.
And now, you’re ready to stop those shopping binges. Below, we’ll discuss some key tips on how to stop spending money you don’t have.
How to stop spending money: 5 key focus areas
When it comes to overspending and ways to stop spending money, focusing on these 5 areas can make all the difference. They are:
- Eating out and uneaten food
- Clothing and accessories
- Expensive coffee
- Unnecessary things
- Credit cards
Let's get into each of these money spending problems in more detail below. I'll also be discussing the specific actions you can take to curb overspending in each of these areas and avoid big overspending mistakes.
1. Take control of your food costs: Eating out/uneaten groceries
It's been a long week and the last thing you want to do is to stand in front of the stove and cook. So what do you do? Punch in an online order, throw your feet up on the couch and turn on your favorite Netflix show.
While this sounds like an amazing evening, it could set you down a slippery slope into a life of little to no savings. On average, an American household spends $3,008 eating out. Those $20-$40 meals add up really quickly, don’t they?
Or here’s another scenario. You happen to be walking past your local grocery store and suddenly remember that your food supplies are running low. As you walk down the aisles, you make educated guesses on what’s missing because your memory is still sharp, right?
Wrong. When you get home, you realize, you still had eggs, there’s the fruit you had forgotten about and bread tucked away in a corner. Yet, you bought all these things again. Now you have duplicates and you know some of them are going to go to waste.
Under these circumstances, what can you do to stop overspending on food? How can you balance your hectic schedule with a need to eat food quickly, conveniently, and affordably?
Make a shopping list
If you don’t have a list, stay away from the store. A list guarantees that you stick only to what you need, eliminating any guesswork in the process.
Learn to say “no” when you need to
If you’re in the red every month, but still find yourself going out to eat every month when you can’t afford to, you need to reevaluate your spending habits. Realize that you’re not saying no to friendships, you’re saying no to a lifestyle that derails your budget.
Have quick and simple go-to recipes for days when you just don’t have time
It happens. Life gets busy. And the temptation is to simply order food online and call it day. The wiser thing to do is to store your own set of go-to recipes that are really quick and easy for nights when you just don’t have time. Pinterest has a ton of great quick and easy-to-make meal plans. Many of which come with grocery shopping lists too!
2. Stop spending money on clothes you don't wear
Have you ever had those days where you looked so good that you were oozing with confidence and getting many compliments about your outfit?
If you think about it, a lot of the time, it's not because you were wearing something new. Rather, it’s because you looked good in what you were wearing. The color made your skin glow or the fit was perfect on you.
New clothes don’t always give us the satisfaction we crave. In fact, they can sometimes go unworn in our wardrobes because we realize that what seemed like a perfect idea through the fancy fitting room light, was not so exciting once we got home. So we just forget about them while they gather dust in the closet.
There’s got to be a better way. Here's how:
Create a capsule wardrobe
This consists of a limited number of quality staple items you can mix and match throughout the year. You can learn how to build one and create a beautiful wardrobe while you are at it.
Take good care of your clothing
Taking care of the clothes you already have helps to avoid the need to constantly replace them. This, in turn, means less spending. Remember that wearing clean and well-laundered clothes goes a lot further in boosting your confidence than spending money on new items.
Learn to use accessories to revamp an old outfit
An outfit is more than a piece of clothing. Rather, it is a comprehensive look that consists of hair, shoes, and accessories. An old look can look completely new with any items switched around.
3. How to stop spending money on expensive coffee
We get it. Drinking coffee is like breathing air for some people. It can truly make or break your day. But that doesn’t mean you have to break the bank to reap its benefits.
If you’re an avid coffee drinker, you have a lot of options to help you keep the costs down. For instance:
- Brew your coffee at home. You can easily save $20+ a week doing so.
- Test alternatives such as a good tea which often contains good doses of antioxidants and minerals
- Use cutting down on coffee as an excuse to ramp up on drinking water or other healthy alternatives such as coconut water.
4. Stop spending money on unnecessary things you don't need
Shopping has never been easier. At the click of a button, you can have exactly what you want at lightning speed. Thanks, Amazon.
As exciting as that is, it can also be counterproductive if you fall prey to shiny object syndrome. You might be wondering what that is.
Simply put, you’re a victim of shiny object syndrome if you’re easily swayed into buying items at the moment. You’re driven more by your wants vs. your needs and you make purchase decisions very quickly.
To put a stop to this, you can deploy a few tactics:
Stick to cash
Using cash automatically prevents you from buying unplanned items online. It also restricts spending in-store forcing you to stick to the cash on hand.
Track your expenses
Much of the time, when we are completely unaware of how much we’re spending, we are more likely to assume that there’s plenty more where that came from. Meanwhile, our bank accounts will be telling us another story.
Spend 5 mins a day checking your bank balance
Related to the above, if you’re unaware of your bank balance you will overestimate what you have available in your account.
Know what triggers your spending
Are you spending more when you’re with friends? Surfing online? Walking through the mall? One key to curbing unnecessary spending is to know yourself and be in tune with when you spend more.
Give yourself a few days to think
Sometimes, time to really think through whether an item you’re thinking of purchasing is a want to have or a need to have can help you gain clarity on whether to spend money on that item or not.
5. Stop spending money on your credit card
Credit cards can easily get you on the fast track into debt. If you struggle to exercise discipline with them, it may be best to completely stop using them. In the U.S. credit card debt limits families from investing and building wealth for their futures.
If you’re currently dependent on your credit card to help you with expenses, you need to have an honest self-evaluation to determine if you’re depending on your credit card because you’re trying to build your credit score, you’re unable to keep up with your bills, you’re looking to build rewards from using the card or any other reason.
If it’s causing you to sink further and further into debt, it's time to take action. Here’s how:
Learn how to budget
While the thought of budgeting may make you want to run for the hills, this discipline could be the difference between you retiring and you working forever.
Budgeting helps you fully know and understand where you’re earning and spending and helps you to plan how to save.
Ditch the cards and carry cash
It never fails. Carrying cash is by far the simplest solution to ridding yourself of credit card debt. When you stop carrying them around with you everywhere, it becomes less convenient for you to splurge on that unplanned item.
Cut up your credit cards
If you’re truly struggling to stop using the cards, you may need to take more intense action which would be putting them through the shredder. A spending freeze on credit will be worth your while.
4 Tips to help you be mindful with spending money
Step 1: Know your why
When you set a new goal—for instance, to stop overspending—you need to have a reason you want to change. In other words, you need to have a WHY. Having this reason in place is one of the things that will keep you motivated to achieve your financial goals (in addition to working on your self-discipline and building new habits).
Your why could be your children, buying a house, moving to a different city. Whatever that thing is that you dream of, or want to look back and be proud of.
Take photos of it, save it on your phone, set calendar reminders—basically, you want to make sure your WHY is always in focus in your everyday life.
Step 2: Identify your triggers
The next step if you're wondering how to stop overspending is to determine what causes you to overspend. Do you find you are overspending when you hang around certain people? Is it when you see what people post on Instagram? Or when you drive by the mall?
Once you figure out what your spending triggers are, then it's time to address them. This could mean spending less time with the people that you find yourself spending the most money around. Or maybe unfollow people on Instagram, or take a different route so you don't have to drive by the mall all the time.
Identifying and addressing your triggers, especially in the early stages of you working on your overspending habit will help you stay on track.
Step 3: Learn how to budget and go on a cash or debit card diet
Having a budget is how you track your income and expenses. Once you are able to track your income and expenses, then you'll know how much you have leftover to spend/save. A good idea is to track your current spending for 30 days to see exactly where your money is going and determine what you need to cut out.
Once you are able to track your expenses for 30 days, you will very likely find areas of unnecessary spending. Eating out, daily coffees, shopping, unused gym memberships, and subscriptions are things you can cut back on or cut out completely.
You may find that a lot of your overspending is unavoidable and you cannot cut it out right away. Things like being tied into a lease and having to pay rent, or being in the middle of a contract period that's costly to terminate.
If you're in this situation, then consider some ways to increase your income. Find a better-paying job, a part-time job, or even start a side hustle to bring more money in.
Next, consider ditching your credit cards. Go on a cash/debit card diet where you designate a fixed amount of money that you can spend every week or month. When it runs out, you are done spending until the next month.
Step 4: Automate Your Bills
The final piece of the puzzle involves automating bills. Automation saves you quite a bit of mental work at the end of each month. It simplifies the decisions you need to make around your finances, and it ensures that you do not suffer from any decision fatigue that will leave your finances in shambles.
Automation can be done across your bills, investments, debt payments, and other recurring expenses.
Once you have direct deposit set up with your employer, you can focus on setting up automatic bill payments.
Since you likely have multiple expenses, you will want to sync up the bill payment dates so that they align with your direct deposit. You can do this by calling each of your billing companies and asking them to reset the billing cycle to match your paydays.
I've learned how to stop spending money, now what?
Now that you’ve mastered how to manage your spending, you can shift gears into thinking about what do with the balance of your funds. Thankfully, you have quite a few options that will set you up for a stable and happy retirement. You can either:
Save more money
Saving money is all about habits. Once you manage to curb negative spending habits, you can focus on building healthy savings habits.
A survey conducted by the Federal Reserve found that 40% of American households would not be able to cover a $400 emergency if it arose in their lives today. Saving money will help you build that cushion in emergency funds to meet any unexpected expenses.
Pay off debt
Paying off debt, whether consumer or education loans should always be a top priority as the consequences for not doing so on time can have broader implications for your finances.
One effective way to tackle your debt if you have multiple source sources of it is to use the debt snowball method, a method that prioritizes paying off your smallest debts first to help you achieve quick wins and to eliminate the overwhelm of paying down large debt.
Once you’ve tackled your debt, you can then focus on a strong investment strategy. You’ll want to ensure you have a retirement account set up where you are regularly making contributions.
If your employer offers a match, make sure you are signed up for that. With any investment strategy, it is important to invest for the long term in order to maximize your returns and to ignore any short-term volatile movement in the stock markets.
Technology is rapidly changing and the skills you had 5 years ago might not be as relevant as they were back then. Investing in your own periodic self-development will go a long way in keeping your skills fresh for today’s job market.
Start working on how to stop spending money randomly!
Curbing your overspending could truly be the start of a different financial future for you and your family. While it may seem daunting, you need to remember that overspending boils down to habits you build into your day today.
If you can truly isolate some patterns that may be holding you back financially, you’ll be well on your way to not only reducing your spending but also securing the future you dream of.