How to Stop Spending Money

Buying new things is fun. But then you get the credit card bill and try to make a plan for how to stop spending money because you’ve gone over budget again. Whether it’s $5 a day for coffee outside the home or $100 for a new shirt you don’t even really have space in your closet for, you might be wondering why you do this and ways to reprogram your brain to stop. Here’s a look at tips for putting a stop to overspending and reaching your financial goals.

Why People Overspend

Overspending isn’t just a problem with wanting more stuff or a lack of planning when going out. Often, those who overspend have psychological triggers and enjoy the thrill of getting something new or making a purchase.

If you’ve been beating yourself up about your growing credit card bill, be easier on yourself and focus on self-care and overall well-being to help strengthen your financial well-being. Some additional reasons why people overspend include the following.

• Social media: When you’re constantly looking at what other people have in their posts and being bombarded with ads telling you what you need, it’s hard to not buy those things. After all, it’s just $20 or a new $100 monthly subscription box that seems as if it will feel life-changing and give you everything you’ve wanted. The challenge with social media is that people want what they don’t have, and online platforms can breed the comparison game. When someone else gets a new couch, yours might look worn out or dated to you.
• Poor budgeting techniques: Some people have large incomes and others small. But even when you make good money, poor budgeting can lead to major financial woes. Avoid living paycheck to paycheck by tracking your spending and looking for spending categories that are out of control. This is a wise way to keep your spending in check.
• Retail therapy: Compulsive spending or shopping to feel better are dangerous habits. Many purchases require time and planning. Not only will you find how to stop spending money when you reduce impulse buying, but you’ll also make better decisions and end up with higher quality products when you take your time to research and ensure it’s what you want. Don’t look for instant gratification from shopping. Try to create new stress-relief habits and hobbies. Remind yourself that retail therapy only makes you feel better for a little while until the credit card bill arrives.
• Credit cards: It’s easier to spend money when you don’t see it leaving your wallet. Credit cards make it too easy to spend money you might not have. Test using cash for daily purchases instead of a credit card and see if your overspending reduces. Requiring that you go in-store to finalize purchases instead of buying everything online could also help reduce spending.
• Lack of long-term goals: Perhaps you aren’t in debt. But you also aren’t growing your wealth. If that’s the case, you should set some long-term goals to encourage saving. Consider your retirement and what larger purchases you hope to make someday, such as a new car or house. Keeping those goals in sight to help motivate yourself to spend less.

How to Stop Spending Money

Review these tips for how to stop spending money so you can build a better financial future for yourself.

1. Evaluate Spending

It’s hard to cut expenses when you don’t know where your money is going. Spend some time reviewing spending categories. Test out the best budgeting apps that can help you do this with greater ease. They’ll put your spending in categories automatically although you can move the expenses to other categories if the app gets it wrong.

Look first at essential categories, such as shelter, transportation and utilities. Get a baseline for how much money must go to these categories to see how much room you have left for more fun spending.

When reviewing your food budget, look at groceries and eating out/takeout carefully. These categories can be hard to evaluate based solely on numbers because groceries are essential. You’ll need to look at what you’re spending to see how you can trim unnecessary expenses.

Check your recurring expenses to look for things you didn’t realize you were spending money on. Those are easy subscriptions to discontinue, especially with so many streaming services available. You likely aren’t able to use more than a couple of streaming services. It might be better to create a policy for yourself that you use one service for several months and then switch to avoid paying for multiple services when you can’t use them.

2. Build a Budget

Now that you know where your spending is going, you can look for ways to cut back. Some people struggle with cooking at home instead of eating out. For them, making a better grocery list is how they can stop spending money unnecessarily. Others love buying gifts for people and seeing their faces when they give it to them. In that case, setting limits on that spending or finding small acts of kindness you can do instead might be how to curb spending.

Picking realistic numbers for what you can spend in each category can keep you honest all month long. That way there are no surprises when your credit card bill arrives. Check on how you’re doing each month toward your budget to resist things like retail therapy or getting takeout from a nice restaurant on the weekend when you don’t have the money for it.

3. Plan Your Spending

Make a rule for yourself that you won’t buy new things until you’ve thought about it for several days or even a week. This practice can reduce impulse buying or using retail therapy to feel good. Avoid shopping in stores where you have trouble resisting new things. If you can’t do weekly grocery shopping at stores like Walmart and Target because they offer other items, go to a grocery store without material goods so you can better plan your spending.

Avoid buying a clothing item the first time you see it. Instead, go home, evaluate your closet and see how it will fit in with your wardrobe. Ask yourself whether you have something in that color or style already and if you really will wear the item. You might be surprised at how well this works for slowing overspending.

4. Make a Grocery List

Spending too much money at restaurants and coffee shops might be due to a lack of planning. Spend some time before you go to the grocery store planning your meals. Make a list of ingredients necessary to make those dishes and be sure you have everything necessary on hand.

Eating out is expensive. While it might be just $10 a day, that adds up. And you might be forgetting additional expenses in this category, such as a little snack to go with your retail therapy or expensive coffees, teas or other beverages. Knowing you have the necessary things on hand to cook can help.

Or, opt for premade meals. While these are more expensive than buying the necessary groceries to cook, they are less expensive than eating out. Start smaller by making habits of staying home to eat and then you can slowly test your culinary skills to get better in this category.

5. Avoid Overspending During Sales

Sales use sneaky psychology. If you’re looking for how to stop spending money, you should likely stop going to sales you see advertised. The problem with shopping sales is you can spend more money thinking you’re saving money. In these cases, saving money during a sale can lead to some serious expenses because you’re purchasing items you don’t need.

For example, you might purchase items you weren’t planning to buy solely because you can get 50% off. The reality is that you’re still spending the other 50% on the item that wasn’t part of your budget for the month.

6. Never Buy on Credit

Don’t spend money you don’t have. Commit to paying off your credit card each month and only buying new furniture or large purchases once you have the money instead of using credit. Life can throw you curveballs, such as in the case of a large appliance that stops working that you hadn’t budgeted or planned for where credit can be a true lifesaver. But everyday purchases or goods you can plan for you should not go on a credit card or line of credit you can’t currently pay off.

While this practice helps you build healthy finances, it also curbs unnecessary spending. You’re less likely to replace furniture before the end of its life if you have to budget and save for it. You might also realize just how much that item is costing you over time because you bought it on credit and must make interest payments on it. Purchases you put on a credit card and then can’t pay off at the end of the month can make you pay as much as double the price in interest or even more.

7. Make Financial Goals

You’re less likely to spend money unnecessarily when you have big goals for yourself. Instead of swiping your credit card without thinking, contemplate whether this purchase is necessary and helps you meet your savings goals. 

Whether you’re saving for short-term items, like a new piece of furniture, or long-term items like the downpayment on a home, these goals can keep you motivated and disciplined.

When setting goals, you should have short- and long-term goals. That way, you’re regularly achieving them and can see progress toward big goals, including retirement and debt payoff.

How to Make These Changes Last

If you’ve looked at how to stop spending money before but have fallen back into your previous spending habits once again just a few weeks or months later, you might be wondering how to make lasting habits. Here’s how to do that.

• Check spending regularly: Don’t wait until the end of the month to see if you’re on target for your budget. Keep yourself honest all month long by reviewing your budgeting app or spreadsheet to see your progress toward your goals. If you don’t dig yourself a large financial hole right after starting the new habit, you’re less likely to feel defeated and quit your new spending habits. Building better finances happens one day at a time.
• Surround yourself with people who follow similar financial habits: Stop shopping with other overspenders and don’t go out to restaurants with people who want to order starters, entrees, dessert and drinks. Invite them over for dinner instead where you have more control over the menu and what you’ll be spending.
• Remind yourself why you’re making the change: Put your goals in a visible place where you’ll be reminded regularly why you’re working so hard to change your spending habits. Keeping goals at the forefront will keep you honest about your spending.

What is the 50/30/20 Rule?

When you don’t know where to start with building a budget, the 50/30/20 budgeting rule can help. Here’s how that breaks down for effective budgeting.

• 50: Spend 50% of your after-tax income on needs or things that you must, including housing, utilities, debts and groceries. You can make changes in these areas by moving to a more affordable living situation or selling your car and getting a more efficient, less expensive model. While these expenses are not set at their current rates, they are expenses you can’t avoid entirely. Shop around for more affordable insurance or consider whether you can afford to increase your deductible to lower your annual rates.
• 30: Allot 30% of your budget to wants or discretionary expenses. For example, you want a lifestyle that includes music and TV streaming services. They aren’t necessary expenses but they are important to you. Or perhaps you’re a season ticket holder to your favorite sporting team and, for you, that’s the main category where you spend entertainment funds. Many expenses will fall in this category including vacations, an upgraded internet plan for faster streaming, new electronics, clothes items you don’t necessarily need and other entertainment. When you need to make cuts, this is the best category to tackle first to see if you can build a more affordable lifestyle.
• 20: Allocate 20% of your net income toward investments and savings. You should have no less than three months of emergency savings to cover expenses if you were to lose your job or encounter another unforeseen circumstance. Once you’ve built those savings to that point, you can work on putting more money toward retirement or building an investment portfolio that helps you earn more passive income to achieve the lifestyle you want.

Discipline Is the Key to Stop Overspending

When you aren’t able to figure out why you can’t stop spending money on things you don’t truly need, the missing element might be discipline. If you delay gratification in your spending and wait to buy something until you’ve had more time to think about it, you’ll be surprised at how effective this tactic is. Keep yourself honest with a budget and check it regularly to avoid spending unnecessary funds. Better planning and discipline will go a long way in building healthy finances and answer the question of how to stop spending money you don’t have.