Signs it’s time to curb buying and tips to stop overspending.
There are two types of overspending. Evidence of the first type is when your bills exceed your income. Another way we overspend is by paying too much for goods and services. Let’s take a look at each and some ways you can curb overspending.
When bills exceed income
There are several clear signs of outspending your income:
- You’ve maxed out your credit cards.
- You have to choose which bills get paid and which don’t; subsequently you see a drop in your credit score.
- You’re unable to save money—for short-term goals or long-term goals like retirement.
If you find yourself in one of these situations, it’s time to take a close look at where the money goes. Review your spending for each of the following categories:
- Cell phone and mobile device service —Ask your provider if they have a better deal than your existing plan. Consider switching providers to lower this recurring cost.
- Subscription services —Cancel any subscriptions that aren’t absolutely necessary. Product, publication, app and software subscriptions have a way of accumulating without us noticing. When your finances improve, you can re-subscribe if you want to.
- Landlines and cable —Most of us rely on cell service and Wi-Fi, making landlines and cable redundant. Drop them to save money.
- Memberships —Cancel memberships you no longer use, such as fitness centers or professional associations.
- Annual fees for credit cards —When annual fees start at $35 go up to $200, they really add up. Ditch high-fee cards and switch to one with no annual fee, like a credit card from Consumers.
Impulse buying and budgeting
Also, look at your daily spending habits. Do you have a habit of making impulse purchases for yourself or others? These can include—but are not limited to—snacks/food, clothes/shoes, video games, deals, in-app purchases, home décor, tools and treats. Overspending also happens when folks buy multiples of the same items.
If you struggle with buying on impulse, adopt a budget. (Here’s a worksheet to guide you.) Many folks find success in sticking to their budget by using only cash or a digital envelope system. Also, make a list before heading out to a store or shopping online; then only get what’s on your list.
You can also slow down impulse buying with favorite online sellers by deleting your credit card information from your account profiles. This way, when an item is in your cart and you go to the checkout, the purchasing process gets slowed down. When asked for your credit information this will be an opportunity to ask, “Is this in my budget? Is it really necessary?” When the answers are no, don’t complete the purchase.
Some people find it easier to budget than others. If it’s a challenge for you, check out our free personal financial counseling through GreenPath
Overspending without knowing
Many of us overspend without realizing because we don’t comparison shop. With all of life’s demands at home, work and school, it can be hard to find time to compare before you buy but it’s worth it.
Avoid overspending by doing research before you buy. In addition to price, see how the available options stack up against each other in terms of features, reliability, warranty and user reviews.
Changing spending habits is not a one-and-done process. It’s a series of steps. Asking questions like these can help you step toward better financial health:
- Is the name brand really better or will another one work just as well?
- Are used or second-hand options available?
- Is there a cheaper way of getting a meal? For example, instead of going to a full-service restaurant consider prepared foods from the grocery store deli. Instead of prepared foods, buy the ingredients and make your own customized meals.
- Before buying, assess what you already have on hand. What’s in your closet that’s been forgotten? What could you use instead? Is there food in the pantry or fridge that can be turned into a quick meal?
Also, check out our tips for these common big-ticket purchases:
- How to save when buying car tires
- Buying a mattress online vs. in-person
- Buying a used EV
- Buying used items
- Home appliance buying tips
Before renewing any insurance policy (homeowners, auto, health), shop around. You may discover hundreds of dollars in savings. Also, choosing a higher deductible will help lower insurance costs. As a Consumers member you have access to discounts with Nulty Insurance, so check them out too.
You CAN stop overspending
If you feel discouraged when you try to change your spending habits, don’t be discouraged. Even a little progress is progress! Use the tips and questions above to spend smarter and become financially empowered.
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