If you realize that you're overspending and are ready to stop — remember, overspending hinders the life of your dreams! — there are solutions.
- Leave your credit cards at home when you go out. In fact, leave your debit card at home too. Only take the amount of cash you need for the day.
Freeze your cards in a cup of water. As you wait for them to thaw out, you can decide if your purchase is really necessary.
Don't use your credit cards like a debit card. Stop using it to make small everyday purchases, such as your cup of coffee, afternoon snack or lunch.
Create a Needs vs. Wants List
What's the difference between a need and want? A "need" is something you cannot live without — a necessity. Food, clothing, shelter and medical care are basic needs. A "want" is something that you desire but isn't necessary to live: a luxury, such as designer clothing, a vacation home or a sport utility vehicle. A need may be a pair of shoes, but a want is the $150 pair advertised by a famous athlete.
When you can control your spending on life's wants, you'll have more money available to save for what you need in the future. Start by making a list of all your needs and wants. Try to be brutally honest about which category they fall into. Then, review the items on your want list. Decide which are "high-priority" wants, and which you can truly live without. Then, try to create a balance between your needs and wants. What are you willing to give up? Can you compromise? For example, can you give up your morning coffee stop (or make coffee at home) in order to save for the spring break trip you want to take?
|Breakfast, lunch and dinner!
||Soy latte each morning
|New winter coat
|Daily transportation to work
||Summer vacation to Europe
Find other sources of happiness
Research shows that things don't create happiness; experiences do! (NYT: But Will It Make You Happy?) Knowing that a new sweater or phone won't keep you happy for long can reshape the way you spend.
Learn to shop smarter. Check out our sites for saving.
Take the "impulse" out of impulse buys. With online shopping, an impulse buy can happen in one quick click. When something tickles your fancy, don't buy it right away. Keep a list. If you still desperately want this item a week later (and it fits in your budget), go for it. But you might be surprised at how many times you think, "I don't really want it."
Get help for compulsive spending
If you are overwhelmed, or concerned about excessive spending, Project Know
has some excellent information. Additionally, our financial advisors
can help set you on the right path.