Many households in the U.S. live beyond their means. According to a report published in CNBC, consumers overspend roughly $7,400 every year. These individuals have various reasons for spending too much. Some lack awareness of their actual spending habits or triggers, while others “guesstimate” their loan payments, household expenses, and income incorrectly.
Consumers should take steps to curb the urge to splurge. This way, the balance in their bank account won’t dip all the way to zero and possibly land them in financial hot water.
If you need help keeping your spending in check, take note of these financial suggestions:
Create or Improve Your Existing Budget
Take a good look at how much you’re earning versus how much (and how often) you’re spending. Give yourself a financial wake-up call by figuring out how much you’re blowing on electronics, high-fashion apparel, and other luxury items.
Get started by following these simple steps:
- Make a spreadsheet. Whether you do it on a mobile app, on Excel, or a piece of paper, the important thing is that you have a document that lets you categorize different types of income and expenses.
- Add up all your sources of income. Determine how much you’re getting monthly from your wage, salary, tips, and other earnings.
- Gather all your fixed expenses. Make a category for expenses with fixed monthly amounts, such as credit card, utility, and mortgage bills.
- Note down your variable expenses. This includes spending on things like groceries, entertainment, gas, and clothing.
- Put some of your money in a savings account. A good rule you can follow is the 50/30/20 rule. Allocate half your earnings on necessary expenses, 30 percent on your lifestyle choices, and the rest on your savings (or paying off debt, if applicable). Pro-tip: Check with an experienced financial planning consultant to find out what savings vehicle is ideal for your financial situation.
Favor Cash over Credit Cards
People may find it more convenient to buy an item with a credit card than to count a wad of bills and pay in cash. This convenience, unfortunately, is one of the reasons for overspending. Since they’re casually handing over their credit card to buy stuff, they’re often unaware of the total amount they spend (or splurge) each month.
Rather than rely on credit cards, give these pieces of plastic a break and switch to cash. Consider adopting a cash-only envelope budgeting system to force you to use cash. Start by getting envelopes for all your variable expenses. Then, label each expense and allocate a fixed amount of cash for a given week or month. The rule is simple: When the money in the envelope runs dry, you’re done spending for that week or month.
Choose More Affordable Means of Entertainment
You can still live a full life by opting for cheaper entertainment plans. Instead of having a pricey dinner at your favorite four-star restaurant, drink a cup of coffee with your friends at your local coffee shop.
You can avoid overspending by budgeting, choosing cash over credit cards, and going for more cost-efficient forms of entertainment. While there’s no silver bullet against overspending, these strategies can help you manage your finances, build self-control, and safeguard your financial health.
As a professional marketer with over 25 years of experience in the industry, Brian Townsend has all the knowledge necessary to become Storm Hosts’ editor-in-chief. Aside from his editorial duties, he also sits on the board of multiple technology startups. He is a proud early adopter of social media and other tech solutions for marketing