According to Dave Ramsey, overspending is the most common problem of a family or an adult. Overspending is spending through credit or cash money more than you can afford or spending above your income. Dave Ramsey is an American financial guru, strongly promoting people to watch their expenses and to control their overspending money habits.
If you cannot stop your overspending money habits and you want to save more money, you are lucky because this article is right for you.
Some people become addictive in spending more money than what they can afford and others become lavish spenders because of peer pressure. Financial Samurai has additional reasons of overspending and he also elaborates a cure of overspending money behavior.
The majority of working people is living in the paycheck to paycheck lifestyle. They do not even know how to get out of the rat race or if they know, they do not know where to start.
What hold you from saving money and investing? Are you in the situation that has always no balance left for savings? Are you buried with high debt?
Then you have to look forward seriously about your overspending habits.
The 3 Best Ways to Stop Overspending Behavior.
1. Save Money First
The moment you receive your salary or income, first, you should set aside your savings amount before you start spending. You can also arrange with your bank to deduct automatically fixed amount every month from your salary for savings. This is one of the solutions to control your overspending habits.
You can use your savings account to invest any moneymaking vehicles like top mutual funds, gold or silver, rental properties, stocks and bonds.
Expenses should be less than your income always and we can express this in the formula below to solve your overspending problems.
Expenses (Spending Cost) = Income – Savings; (f1)
Moreover, if you are paying debts and you are also building asset or investment, we can modify the formula as shown below.
Spending Cost = Income – Savings – Investment – Debt; (f2)
2. Prepare a Budget and Stick to it
Another way to limit your overspending habit is by preparing a budget plan for the week or every month. Make a habit to prepare a list of items that are needed before going out for shopping or buying grocery items and you must stick to your list.
See to it that your grocery list or shopping list is based on your budget plan. In my previous post, I discussed the 10 Tips To Save Money on Groceries, where you will discover how to save money on grocery items and to stick to your budget too.
Jennifer is expert in saving and budgeting. She even recommend to other people to stop buying any items that are not within their budget.
Most of the American millionaires are living below their means and it was revealed in the “The Next Door Millionaire” book. You will discover many financial lessons from this book especially in avoiding of buying status symbol objects.
3. Always Pay Cash
Now, you may start paying cash every time you buy any goods because there is an emotion and psychological feelings attached to it when you are using cash to pay. You are hesitant or have a dislike feeling every time you hand over your cash to the counter to pay something.
However, when you are using a credit card to buy an item, you are paying more than the actual price of it. Remember that there is an interest attached to it. In addition to this, you have also that feeling like you are not spending the real money if you are using a credit card. Art Markman broadly explains the behavior of spending with a credit card.
Leave your credit card at home and do not bring it when you are going out with friends and when you are going to the grocery store or shopping center. You will use credit card only in times of emergency.
When paying cash become your habit, then next time when you want to buy expensive items, you tend to save first in order to afford of buying of your desired object.
Mr. MWD Final Words
Solving your overspending money habit is easy, though it will take time. There is always a way to solve it if you want to. You are the pilot of your life. You are the ones responsible for your own finances, in every action or plan that you are undertaking.
Learn and practice controlling your expenses and daily expenditures. That is why, living below your means is necessary to achieve your goal, which is to stop overspending.
Now, take your action and set a goal limiting your spending lifestyle and improving your financial being.
In taking action, I strongly recommend to follow what Thomas Jefferson said; “Never put off for tomorrow, what you can do today.”