Every year we have more Americans that are in debt. One of the key reasons is that we are used to spending too much money, mostly on unnecessary things. On the other hand, no one taught us how to save, invest and budget.
Our mission is to change that. Therefore, in today’s article, we are talking about:
- What are the possible reasons why you’re overspending?
- Tips and tricks on how to stop spending money.
- Advice on how to start budgeting and saving money.
- What should you do after ‘healing’ from overspending?
- The best way to take control of your finances.
Let’s dive in!
Understand Why You’re Overspending
The first step if you want to stop overspending is to find your spending triggers. When you can detect and understand similar situations when you are more likely to go impulse shopping, it will be easier to regulate those urges.
Overspending is usually connected to the emotional and psychological state of mind. We overspend for many reasons, but people often guestimate their salary, expenses, debt payments and spending wrongly. Here are some most common triggers for spending more money than necessary.
Social Pressure
We all have different incomes, monthly expenses, habits, and priorities. Often the problem is when people go out with their friends who have, for example, smaller monthly fees and love to spend money on shopping or day trips.
Even though their intentions aren’t to be a bad influence on their friends, they can be. Normally, you want to hang out with your friends and do the things they want to do. But, you need to see if you are spending money on the things you wouldn’t otherwise.
Maybe you don’t need to go to brunch every Sunday. Instead, grab a cup of coffee or even make brunch at someone’s house. You can do many activities for free (or with little money), like hiking instead of an expensive spin class.
This doesn’t mean that you should never do something that requires paying. Just be aware that maybe you spend more money when you want to socialize.
Don’t stop hanging out with your friends. Instead, change your activities and perhaps help them get back on track with their finances!
Lifestyle
It’s not rare that people who are used to a particular lifestyle don’t know what to do or how to react when facing financial hardship. They are trying to do the same things they did when they had more money.
For some people is the time they got kids; for others is when they get a mortgage, and sometimes when they get fired. These people must learn how to use their budget when it’s changed.
Most of our financial habits and relationship with money comes from our upbringing.
If someone was raised in a household where money was tight, they might want to splurge themselves and spend money on the things they didn’t have to make up.
Or, if their parents were overspending, they might continue the same bad habits and patterns.
Mood
Many people find it relaxing to go shopping when stressed, anxious or upset. They say it’s like therapy. But, this is inconvenient for your financial situation and your mental health.
Buying something just to feel better doesn’t help you long-term. If you think this is your trigger, try doing yoga, going to the park, calling a friend, or making a cake instead of going to a shopping mall.
Spending money for some people is automatic; they don’t even think of how much is on their checking account before an impulse buy. But, instant gratification doesn’t last long and usually, after that, comes to regret. Lifestyle creep occurs when people constantly increase their spending over time and often accounts for unrecognized expenses.
It won’t be easy to change this because we associate some activities with our emotions and mental state, but it is possible. You made that habit, which means you can break it too. It just takes a little time to build self-discipline.
How To Stop Spending Money
Now that you know what triggers you to spend money, here are some tips and tricks on how to stop spending money.
Stop Ordering Food / Dining Out
We are all busy, and after a long day at work, making time and being eager to stand in front of the cooker and put together a meal is tough. It’s easier to take your phone and make an online order. You can then eat food someone brought you while you relax on the couch in front of the TV.
Yes, it sounds incredible. However, it is not good for our budget. Unfortunately, it quickly becomes a bad habit, and just like that, you’re ordering every night and spending thousands of dollars. Some studies show that, on average, an American family spends over $3,000 to eat out.
Another frequent situation is people who buy food while working. Day after day, 20$ after 20$ and it becomes an enormous amount of money spent just on food.
Sometimes people unintentionally end up going out to eat. For example, they go food shopping after work in their local grocery store and buy things that cross their minds.
When they head home, either they buy something that they already have (meaning it will go bad because they can’t eat that much), or they forget the key ingredients for their planned meal and now have to order/go out because there is no point of cooking.
Make a Plan
The solution for all of these is pretty much the same – planning. At first, it might be challenging, but it requires only half an hour per week (or a few minutes the day before). The most important thing is to fix the mindset and build a habit.
Planning ahead of your meals and shopping list will make it really convenient for busy weekdays. You will have a ready checklist when you go grocery shopping, and thanks to a meal plan, know what you need to cook each day.
If you know that you have no time after work, consider weekly meal prep. In just one day, you will make all (or most) of the food you eat throughout the week. And if you don’t bother spending half an hour per day making dinner, make sure to make bigger portions and pack leftovers for tomorrow’s lunch in the office.
Of course, you can still eat out or order food, but be sure that it was planned (for example, dining out every Friday evening or special occasion) or that you planned how much money you will contribute to this weekly/monthly.
Make Your Cookbook
You will be surprised how many recipes only take 15 minutes. Make a list of dishes that require almost no time and always have essential ingredients. After a bit of practice, you will be quicker in making food, and it will be easier.
Shop Online For Groceries
Some people feel overwhelmed in a big supermarket because they fall prey to shiny object syndrome and cannot refrain from compulsive spending.
If that is your case, too, consider online grocery shopping because it’s easier to search only for things you need, and you can always see a running total of your purchases.
Many online shops have the option to make a list of your favorite items, so next time ordering you will have a list of things ready. Small changes like this can have a significant impact on your spending habits.
Quit Spending On New Clothes
Let’s face it – new clothing is exciting. It adds a bit of spice to regular activities. Spending money on clothes is especially problematic if you’re inclined to buy cheaper clothes.
Usually, that stuff is lower quality and doesn’t last long. So, you spend too much money to buy a new wardrobe each season. Social media is often one of the biggest bad influences when it comes to a clothing impulse purchase.
More important than having big piles of clothes (that will look old in a few months) is having quality clothing that excites you to wear every time! Often is better to invest a little more money in some staple pieces that you will wear for years.
Capsule Wardrobe
If you haven’t heard of a capsule wardrobe before, immediately go to Pinterest or YouTube!
The main idea is to buy 15-20 staples and mix & match them around for an endless number of different outfits.
Thanks to this method, every piece of clothing match another, and you are covered for various events and occasions. Always having what to wear and feeling good about it will help you to stop spending money on unnecessary clothes. This will help you save money but also time and nerves.
Take Care of Your Items
Taking good care of your clothing items can prolong their life. You will save a ton of money just whipping your shoes every time they get dirty, or don’t wash dark and pale clothes together.
Stop Spending Money On Coffee
Drinking coffee is a ritual for some people. And we get it – there is no better way to bust your energy or take a 5 min break than having a cup of coffee.
However, it’s not something that should be in debt for. Instead of buying a coffee every morning from a coffee shop, consider purchasing a thermos cup and making your own.
Another cheaper and healthier option is to exchange one cup of coffee for one cup of tea. Some tea, like black tea, has a decent amount of caffeine. Maybe it doesn’t seem like much money you would save, but if you apply this mindset to every area of spending, you will make all the difference.
Stop Paying With Your Credit Card
Your credit cards can be your worst enemy when you are striving to save, and the internet isn’t helpful. Personalized ads infiltrate social media feeds, influencers talking about ”life-changing” products, and the Amazon app beckons every time you unlock the phone seeking your attention and money.
Credit cards often push people into debt. The smartest thing for people with discipline problems is to stop using credit cards.
If you depend on your credit card because it supports you with expenses, you should objectively judge whether it is because you’re trying to build your credit score or unable to keep up with your bills. There is always a solution.
Exchange Your Credit card With Cash
Some people find it easier to keep up with their money if they have it in hand. Having a credit card for some seems like having unlimited free money. A debit card is another option if you don’t like cash.
With a debit card, every dollar you spend will be treated differently than with a credit card because you will actually feel that you are spending. You can also make a routine to check your bank balance daily to be aware of how much you have available and how much you spend.
Learn How To Budget
Making a plan and sticking with it is crucial for being on track with your finances. The best way to stop spending cash on unnecessary things is to understand your spending habits, change the bad ones, make a good budget plan and keep tracking your expenses. You can do it on your own, it doesn’t require a financial advisor, but it is kind of like a part-time job. However, your future self will appreciate it.
There are many ways how you can adequately budget, but maybe the easiest way to start on a working budget is following the 50/30/20 rule of thumb. An advantage of this method is that it applies to any monthly income and is straightforward to understand.
Before starting any budget plan, make sure that you understand where you were making mistakes when spending the most money.
The 50/30/20 Budget Rule
The main idea of the 50/30/20 budget rule is to split your income into three spending buckets: essentials, wants and savings.
That way, you will use 50% of your income for basic necessities and fixed payments like housing, groceries, utilities, health care and transportation.
The other 30% of your salary is intended for flexible expenses like a gym membership, education, going out, travelling, spa, clothing, grooming, streaming services, etc.
The remaining 20% of after-tax money goes to savings and debt repayment.
Following this rule, you are ‘forced’ to set aside some money for monthly savings. In addition, you have an exact amount of money you can spend in each category.
The bottom line of the 50/30/20 rule for budgeting is not powerful enough to make you rich and out of debt. It’s convenient for essential planning but not enough to achieve bigger financial goals.
Start Tracking Your Spending
Financial stress can cause physical health problems, struggles in relationships, and stress in retirement. Even if you start following the 50/30/20 rule or any other method, remember always to keep track of your spending habits.
You can install an app on your phone for that, you can have a small notebook in your bag, or you can save receipts in one place, like a folder.
It’s crucial to know how much you spend on what because otherwise, people lose their compass and start overspending just because they don’t have a clue on what. In addition, when you know how much are your fixed expenses, it’s easier to see whether you are spending too much on wants or not.
The illusion people have is when they spend a small amount of money at the time. But, purchase after purchase really can add up. When the month ends, people can face a dwindling bank account and big regret.
By tracking your spending, you will be accountable for every dollar you spend. This is a reminder to follow every expense, not just the big purchase.
What After Curbing Your Spending?
Okay, you stop overspending and then what? You will have more money left for your savings account, but you won’t assure secure golden years or wealth for your heirs. Besides that, the nature of money is to keep moving. It cannot just sit in your bank accounts.
So, the only thing you should do after learning to stop spending money is to start investing and even save more! We want our money to make more money, not to sit and wait for inflation to eat it. You can also contact a financial advisor for some advice, but don’t be afraid to research on your own as well.
And if the first thing in your head when hear ‘investing’ is ‘risk’, ‘losing money’, or ‘the stock market’, continue to read this article because there is a much safer and better way to invest your money!
Savings
Why saving?
Because we want to have money to use for big purchases and emergencies. We want to buy a new car, pay down a credit card balances, a pandemic hits, and we lose our job, or who knows what because life is unpredictable – we don’t want to go to the bank to make a loan every few months and then suffer to pay it back. Instead, we have our own stash of money for things like that.
When it comes to an emergency fund, the general advice is to save 6 to 9 months of your monthly expenses. If you have a goal like a family vacation, then it would be best to plan how much to save each month to have a desirable amount right on time.
Investing
Investing is putting money (or other resources) toward something that has expectancy to earn income, turn a profit or create other positive benefits. We buy assets that we believe will increase in value over time, which can grow our money.
There are many different investment vehicles that you can choose to invest in. They vary with risks, expectancy, investors’ knowledge and goals.
Investing is vital because it is the only way to ensure our financial security in the present and the future. There is no other way to grow your wealth that quickly.
Another important thing you should keep in mind is your retirement accounts. You are wrong if you think, ”Oh, I’m still young and have plenty of time ahead”. It’s never too early to start investing for retirement. In fact, the earlier you start, it will be easier, and you will enjoy it more once you retire.
Where to invest? Let us represent what we think is the best option.
The Ultimate Way To Take Control Over Your Finances
Buying a whole life insurance policy is the best way to invest your money. Because with just one tool, you will get lifelong protection and the option to invest and build wealth.
A whole life policy provides a cash value benefit to the policyholder. After each premium payment, a portion of it goes into a savings portion of the policy, called cash value. Every time you make a payment, the cash value accumulates at a taxed-free rate. The best part is that cash value can be utilized as needed and as the policyholder sees fit.
So, you can repay debt, use it as a down payment on a house, put it in a retirement account, or purchase more insurance with a higher death benefit to leave to your family a significant amount when you are gone. That’s why is whole life insurance for infinite banking most suitable option. Besides cash value, a whole life policy offers a tax-free income sum of money – a death benefit.
And here is the starting point of the Infinite Banking system. You access money through a withdrawal or a loan. Loans are more beneficial because they don’t disturb the compound interest in the policy.
Pros Of Infinite Banking Concept
Let’s highlight the key takeaways.
- The Infinite Banking Concept is a financial strategy based on a whole life insurance policy from a mutual insurance company used as a personal endless banking system.
- Whole life allows policyholders to borrow money and use the cash value of their policies.
- Whole life is a non-correlated asset meaning it is not tied directly to the stock market. Therefore, it is a much safer option than other investment vehicles.
- You immediately improve your cash flow and liquidity when using your whole life policy as an infinite banking system.
- With Infinite Banking, you fully control your financial assets through your whole life policy. It’s all about replicating the traditional banking system and becoming your own banker. Therefore, you have freedom as the banks do.
- Whole life insurance provides a variety of tax benefits.
Final Thoughts
After reading this article, we believe you know how to stop spending money on things you don’t need. It is easier to spend on little things than to make an effort and change destructive behaviour, but it is possible and needs to be done if you want to become a financially strong individual.
Instead of living paycheck to paycheck, we believe everyone can achieve their financial goals. The best way to start building wealth and being financially independent is using the Infinite Banking Concept.
Watch our free masterclass and learn how to become your own bank and own your lifestyle in just one hour!