Overspend is defined as:
“…spend more than the expected or allotted amount.”
Source: Oxford Language
Overspending is a surefire way for financial disaster.
While the solution is simple in theory (just don’t overspend!), the reality, of course, is not that simple. Humans are pretty much emotional creatures. Most of us often know how to not overspend, but some emotions, such as the now-or-never one, can get triggered when things like pandemic or closing store discount sales happen.
Here are 5 tips to avoid overspending:
Set Your Financial Goal
Your financial goal should cover both the short term and long term. Some questions to ask yourself: what sort of lifestyle I want in 5 years, 15 years, and retirement. How much does it cost to have my needs covered per month? How many months should I allocate to cover my needs should my job disappear? How much should I save every month/year to be able to cover my needs when I retire?
Set up a Budget
After deciding what your financial goal is, work out the numbers needed and adjust the lifestyle according to the numbers, or increase the numbers to adjust to your lifestyle. There’s no shame in wanting a certain lifestyle that requires more money than what you’re currently earning.
If you are so inclined to such a lifestyle, go for it. But you should be aware of the consequences, especially when you’re not doing it right. For example, because you want a luxurious lifestyle so much, you work 16 hours a day, 7 days a week. Not only it jeopardises your physical health, but you also risk your mental health.
Most of the time it’s easier to adjust the lifestyle according to what you’re earning at the moment. This means you need to have the self-discipline to stick to the budget. Here are 10 tips on how to stick to your budget.
Know the Difference Between Wants and Needs
When you want to buy something, especially those from sale events, the one question you need to ask yourself is
“How will a certain item affect your work and day to day life?”
Here is a more detailed post on how to tell the difference between wants and needs.
Understand What Triggers You
Fear is the most common trigger for many people, especially the overspender. It often comes as “what if I never see this deal ever again for the rest of my life?”
When you have this fear, you may want to ask yourself, what’s the worst situation that can happen if you don’t buy that item. Will you die? Will someone die? Or are you going to simply have an imaginary ‘pain’, knowing the colour of your pillows, for example, are not matching with your bedsheets?
Remove All Temptations
The most common temptations are shopping websites (eBay, Amazon, Etsy, etc), brochures that are delivered to your house, and email subscriptions that keep telling you what deal and how much you can save,
You just need to be aware that when you buy something that gives you a discount of 50% when you don’t need it, you end up spending money. You take money out of your wallet/savings account/credit card account, no matter how much discount it gives you.
