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How to Stop Overspending and Get Your Budget Under Control

Are you a chronic overspender?

If you start each month with great intentions and spend according to a set plan, but eventually find yourself making mindless purchases justified by that ever dangerous “a little won’t hurt” attitude, you’re likely facing an empty bank account and severe buyer’s remorse by the end of the month.

Once you realize you’ve chipped away at whatever cushion you had in place, you’re left scrambling for money – or worse, using credit cards to cover your bad moves. Overspending is often a learned behaviour that can result from emotional issues (“I’m in a bad mood, so I’m going shopping”), family upbringing (“I couldn’t afford much as a kid, but now I can”), or even lifestyle inflation (“I got a raise, so I deserve a new car”). It’s not always easy to recognize your own negative patterns, so take some time to check your behaviour and determine whether you’re overspending each month.

Signs of Overspending

1. Your Budget Doesn’t Add Up

You’re responsible enough to have a personal budget in place, but are you responsible enough to follow it? If you budgeted $100 for clothes but spent $300, that extra $200 is coming from somewhere, meaning your splurge could be affecting crucial expenses such as utilities, groceries, or your retirement savings contributions.

2. Your Credit Cards Are Maxed

Maxing out your credit card means not only are you living an unsustainable lifestyle, but you’re using additional resources to fuel your overspending. It also means you’re accruing interest and possibly incurring expensive fees for hitting your max. When your spending is no longer about what you have in your wallet, but how much you can get your hands on to continue buying, it’s time to make a change.

3. You Only Pay Your Credit Card Minimum

When your credit card balance is so high or your budget is so tight that you can only make your minimum payment every month, you’re overspending. If you put a $1,500 flat-screen TV on a credit card with a 12% interest rate and you pay it off at $50 per month, it’s going to take three years and just under $1,800 before your balance is eliminated. A willingness to assume long-term debt just because you want something you can’t really afford is a tell-tale sign of overspending.

4. Your Credit Card Debt Exceeds Your Monthly Income

If you’re earning $5,000 per month but have $12,000 in credit card debt, you’ve been spending too much. Your monthly income should always be higher so you can make those credit card payments in full along with all of your other debts and financial responsibilities.

5. You Splurge on Fun Stuff, But Neglect Bills and Fixed Expenses

Pay before play. Financially savvy people understand the importance of paying fixed expenses before purchasing fun items such as clothing, electronics, and holidays. If you find yourself heading to the shops and treating fixed expenses as an afterthought, you’re probably a habitual overspender.

6. Your Expenses Rise With Your Income

Throughout the course of your life, you’re sure to enjoy new jobs, raises, children leaving home, and maybe even a windfall or two. If each increase in income also comes with an increase in your lifestyle-based expenses, you’re eating into whatever extra you’re getting.

7. There’s More in Your Wardrobe Than in Your Bank Account

Do you have 14 pairs of designer shoes and a rack of clothes that still all have the tags on – and also an empty bank account? Investing more in your closet than your retirement savings or emergency fund represents damaging financial behaviour.

8. You’re Resistant to Change

If you’re reading this list and recognising some of your behaviours, but are feeling defensive or dismissive, you could be an overspender. To some people, spending money makes them feel important, happy, and fulfilled – and who wouldn’t want to continue the behaviour that sparks those emotions? What overspenders don’t realise, however, is that they’re heading down a dangerous path. Change can be scary, especially if you’ve overspent for a long time, but it’s essential if you want to live a financially healthy life.

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