The very first thing to do if you are an overspender is to recognize it and accept it. If you want to get control over your spending, itís a good idea to admit it openly and then set yourself up to prevent overspending, while being realistic about the type of lifestyle you want to live.
Don’t Spend Money You Don’t Have
This may seem like a normal bit of advice that makes total sense, but itís harder than some people think. First, you need to know how much you can spend and if you have no idea what your bills entail, itís hard to know what you can spend.
Don’t Set Overly Ambitiously Strict Budgets
When you do try to set a budget, itís imperative to really know what youíre working with. You have to put it all down on the table so that you’re making a budget based on reality rather than fantasy. Plus, you donít want to set a budget that is so strict you cannot ever see a movie or enjoy a meal out with friends. You wonít stick to it.
Don’t Save until You Pay Your Revolving Debt Off
While itís true that you need money for emergencies, if you already owe a lot on your revolving credit which probably carries high interest rates (higher than a savings account), youíll want to pay this down. You can always use the credit if you need it during an emergency but the plan is to pay it off, then start your emergency savings account with that money you no longer send to bills.
Don’t Spend More on Debt Than You Earn Each Month
If you earn $4500 a month, which is approximately the median family income in the USA, you donít want to carry more than that amount of debt on your revolving credit combined at any given time. Try to pay off revolving credit each month or within no more than 12 months.
Do Automate Your Finances
Use your bankís systems to automate bill paying, savings, investing and more of your finances. When you do this, youíll get to focus on ways to make more money rather than ways to make what you have work, due to the time savings.
Do Have Fun
You earn money so that you can live but also so that you can have fun in life. Prioritize experiences over things. The exception is things that can be considered investments, such as a home or a good business suit.
Do Save Raises and Windfalls
One way to set yourself up for success is to start saving all your raises and windfalls. If youíre able to meet your obligations and have a little fun, you may as well put this unexpected money away so that you can use it to cover unexpected bills or to beef up your retirement.
Do Embrace Change
It can be hard to change habits – whether theyíre good habits or bad habits, but this is one area that you should work hard to embrace change on. The main reason is that money is pretty much the most important part of life, since itís what gives us the ability to live the life we want to live.
When you admit that you are a natural overspender, you can hopefully react to that with maturity by setting limits on yourself. However, itís imperative that you find a way to make it less painful to pay off debt and invest in yourself in a smart way that puts both your present and your future into perspective.