Ever gone out to buy bread and bananas but come home with $50 worth of junk food? Knowing how to stop spending money is a work in progress for many of us, with 65% of consumers not knowing how much they spent last month. So, there’s no surprise that the average American overspends by $7,500 each year. Definitely not a small amount.
Why do people overspend?
Some people have a “head in the sand” approach to spending, where they don’t check their bank balance or add up their outings each month. Because they don’t want to know! Others are aware of their spending but don’t know how to stop. Here are some of the top reasons people spend more than they earn.
Out of habit
Perhaps you’re the type of person who always has takeout on a Friday, goes shopping on payday, or takes an expensive vacation every summer. When you wire your mindset to follow the exact same spending ritual every week, month, or season, this is a habit that must be broken.
Boredom
You’ve got some free time (imagine that!), you’re at a loose end and don’t know what to do to combat your boredom. A popular option is to hit the shops to pass the time and spend money you don’t have!
Retail therapy
If you’ve ever found yourself shopping when you’re feeling angry, sad, or worried, shopping is a common way to distract you from your emotions and give you a quick lift. But why does shopping make us feel better?
It’s all down to dopamine – a hormone neurotransmitter that makes us feel good. This is released before we even make a purchase. The problem? Unless you learn how to stop spending money on unnecessary things, your dopamine hit will be followed by a crash of guilt.
Access to the Internet
It’s so much easier to overspend when you have the means to do so in the palm of your hand. And you can end up buying all types of junk you don’t need just because you have shopping apps downloaded to your phone. A couple of clicks later, and there’s the anticipation of new purchases arriving at your home as early as tomorrow!
Motivated by advertising
Marketers know exactly what they’re doing. One common strategy they use on consumers is a scarcity tactic which works by advertising “this offer ends tonight” or “only two tickets left.” The panic you feel when you don’t want to miss out on a great deal is often enough to get your wallet out.
Social pressures
1 in 3 Americans reports that social media is “very influential” on their spending habits. And 59% consider influencer posts to have a bearing on what they choose to buy. This idea of “keeping up with the Joneses” or Instagram envy can make it challenging to keep spending in check.
What do people overspend on?
So, what areas are people overspending on? Some of the most popular categories include:
Grocery shopping
Did you know that the layout of your grocery store is costing you cash? Grab-n-go items like bags of chips or bottles of water are often found close to the store entrance. You’ll also find impulse goods like candy, magazines, and kids’ toys close to the checkout to tempt you while you wait.
The result? Incredible food wastage, not just on a personal level, but on a national one too. In fact, the US throws out 80 billion pounds of food each year which is higher than any other country in the world.
Take out and eating out
The average person spends $1,200 each year on fast food. And we all know this isn’t the healthiest choice! So, why do we do it? Convenience is a top reason, with people who don’t plan ahead finding it hard to keep on top of their weekly meal budgets.
Clothes
We all need clothes, but do we need so many of them? Unfortunately, many of us feel the pressure to buy designer gear we can’t afford or keep up with the latest trends. And even when we’re clothing children who seem to grow as fast as weeds, there’s plenty of room to slash the amount you’re spending on clothes bills.
Gadgets
There’s a certain status attached to having the latest iPhone, PS5, or other gadgets and gizmos doing the rounds. This often motivates us to purchase upgrades to our tech before we’ve outgrown the previous version. And when these items are low in stock, as was the infamous case of the PS5, this means two elements of psychology come into play – scarcity tactics and also social proof. Because everyone wants to be one of the lucky first few who managed to secure the new PlayStation console.
How to stop spending money and save
Now we know some of the danger zones to avoid, let’s take a closer look at how to stop spending so much money. 24/7 access to the internet has made it even easier to fall into the trap of spending, so our tips show you exactly how to stop overspending in-store and how to stop spending money online too.
1. Refine your decision-making process
Next time you need to make a purchasing decision, hit the pause button instead. Ask yourself some crucial questions: do I need it? Can I wait a week and see if I still need it? By delaying the buying process, you give yourself time to come to your senses, check if there’s an affordable alternative or if you can live without the item entirely.
2. Pay with cash instead of cards
If you can stop using credit cards, this is one of the best ways to teach yourself how to stop overspending. Yes, cards are more convenient than carrying cash. But this convenience comes with the expense of using your plastic fantastic to purchase items without a clear understanding of how much things cost.
Instead, paying with cash means you’ll physically take the money out of your bank or ATM. You’ll then evaluate how much cash you have to spend before handing it over. This action helps you understand how much your funds are depleting with each purchase.
Another way to do this is with a digital cash envelope. This gives you the convenience of a card, but still limits your spending.
3. Set a budget and stick to it
A classic how to stop spending money tip here is simply to set a budget. Using your preferred budgeting technique, you’ll track how much income you bring in each month and then calculate your regular expenses (like mortgage or rent, utility bills, transport costs, etc.) Set aside money for savings, and the money you have leftover is what you have to spend on non-essentials.
4. How to stop spending money by saying no to debt
If you follow the budgeting tip above, you’ll live entirely within your means and won’t take on any extra debt. But if you already have an existing credit card or loan balance, take steps to pay the debt down and don’t be tempted to add to it.
When you avoid using debt, you won’t accrue interest on your balance either, making it even easier to stop overspending.
5. Use a savings account with no early withdrawals
Why are you putting away money from your salary into savings? For the future, right? So, make the most of your savings by choosing an account that doesn’t allow early withdrawals. That way, you’ll lock your cash away for safekeeping, and won’t be tempted to make a spontaneous withdrawal to fund that thousand-dollar handbag you’ve had your eye on.
6. Don’t allow credit cards to auto-fill
If you’ve ever used a credit or debit card to shop online, your device or browser may ask if you would like to save your card details. Why? Because it saves you time.
But time-saving should be second to cash-saving when it comes to spending priorities. So, block your devices from auto-saving your card details, and take those extra few minutes to consider whether you need the items in your shopping cart.
7. Remove shopping apps from your devices
What does the home screen of your tablet or smartphone look like? If it’s covered with online shopping or marketplace apps like eBay, Amazon, Shein, or Walmart, you’re not alone.
These apps give you access to a vast array of retail products you may or may not need for your home. And many of them have shortcuts built into them, like Amazon’s 1-Click ordering to make it even faster to go from product page to order confirmation received. Do yourself a favor and delete these shopping apps from your devices to make it more challenging to spend your hard-earned cash!
8. Unsubscribe from promotional emails
Is your inbox filled with tempting emails you don’t remember signing up for? Behavioral targeted marketing means you’ll receive promotional messages based on your specific browsing and buying habits. And this spells disaster for your personal finance.
If you’re tempted by these emails, go through your inbox, scroll down to the bottom of the message, and you should see a teeny tiny “Unsubscribe” link (so small they don’t want you to see it!). Click on it to remove your email address.
9. Use website blockers
Do you have a specific website you can’t stay away from? An online store offering deals and promos you’re always checking so you can grab a discount?
If you know the URL off by heart or find yourself googling the brand name, one way to prevent you from landing on that home page is to install a website blocker. Try software like the Friday Chrome extension, which acts as an accountability buddy and stops you from going any further!
10. Unfollow social media accounts that regularly promote products
Does social media browsing eat into your day? If so, you’ll probably have connected with some social media accounts that love to promote products. Remember: the owners of these accounts are paid handsomely for their role in this marketing partnership. Your best bet is to unfollow them.
How to stop spending money today
Now you know how to stop spending money on unnecessary things! It all comes down to understanding where your vulnerabilities lie and putting a clear strategy in place. Take an honest look at how much you’re overspending, and adopt these tips and tricks to keep your shopping habits in check.
She is also passionate about parenting, mental health, and women’s issues, including how these areas fit into working life. She covers these topics for publications like Business Insider and Entrepreneur.