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Eight Ways to Stop Overspending Now

Do you ever look at your bank account and wonder, “Where did it all go?”

The most challenging client for a financial advisor is someone who can’t get out of his or her own way, whether it’s acting like they are the expert or perpetuating bad money habits. I had one like that. She meant well and wanted to be financially responsible -- which is why she hired me -- but couldn’t stop overspending, despite my warnings. 

She had plenty of excuses: “We can pay it off later.” “My husband grew up poor and so he wants to spoil our son.” “I just can’t seem to help myself.” “I return most of what I buy anyway.” I finally had to tell her that it was impossible for me to help her if she continued her financially irresponsible behavior. Secretly, I felt a little bit guilty because I could relate to many of her excuses as I’d used them myself. 

There are probably as many reasons why we overspend as there are reasons why we shouldn’t. The first step in changing our behavior is to recognize the triggers and to consciously confront them when we’re tempted to give in. But if we truly want to overcome overspending in the long run, it’s also important to examine the more deep-seated reasons why we do it. Here are eight common underlying causes for overspending and how to overcome them.

The Reason: You’re Using Plastic.


Americans made twice as many in-person transactions using cards than cash last year, and, over the next decade, debit cards alone are expected to overtake cash as the main form of currency used for all transactions. And let's face it. Using a card--even a debit card--simply does not feel the same as handing over plain old paper cash. There is something about taking one little card out of our wallet that is so much easier and less painful than counting multiple bills, handing them to a cashier and watching them disappear into the bowels of the register. It can also be a hassle to go to an ATM on a regular basis and many people are uncomfortable carrying a lot of cash. 

But the downside of carrying cards is the ease with which you can overspend. The pain of seeing your funds diminish when you hand over cash actually acts an effective barrier to overspending. 

The Fix: Try using cash for a week (or even a month). Hit the ATM on Sunday and take out the amount of money you feel comfortable spending that week on everyday purchases. Put it in an envelope, and use that as your ATM for the week. That’s a guaranteed way to avoid busting your budget. If you overspend one day, you’ll have to compensate for it the next. One week of using cash, and we guarantee you’ll have a much better sense of what you’re spending every day and what’s really worth the money. (Want some inspiration? See what our writer Terri Trespicio learned from trying to live on cash only for a month.

The Reason: Your Lifestyle’s Bigger Than Your Budget.


If you’ve lived a certain way for a while, and suddenly encounter a financial hardship or additional expense, it’s often hard to give up the lifestyle you’ve been accustomed or to cut back, even if staying the course means racking up more debt. 

As Americans, we grow up expecting our earnings and our lifestyle to continue to improve throughout our lives, but that’s not often the case. Expenses and earnings can fluctuate throughout our lives, as the economy does. (The median U.S. income actually dropped last year.) If we don’t adjust accordingly, we can end up in worse shape financially. 

The Fix: A little preparation goes a long way. If you make a point of consistently living below your means during good and bad times, and make sure you have at least six months of savings set aside, you’ll have a cushion if your expenses jump (with a new baby, say, or a long-term illness) or your income drops. One easy way to learn to live on less and build up your savings: Set up an automatic transfer into a savings account that you don’t touch until, or unless, you need it. After a few paychecks, you won’t even notice it’s gone and won’t look at it as money to spend.

The Reason: Your Childhood.


Many people who grew up poor may feel the urge to overspend to compensate for feeling deprived as a child or to make it seem like they are breaking the lower-class cycle (even if, in reality, they’re hurting their own finances by doing it). 

Similarly, many people who grow up in affluent families feel compelled to spend money to maintain the lifestyle they grew up with even if they don’t have the income to do it. 

And regardless of class, there’s a tendency to repeat the bad money habits we observed in our parents as they’re often our only financial role models.

The Fix: If you lacked good financial role models or advice as a kid, seek them out as an adult. You don’t need to look any further than your local library or bookstore to find inspiring and instructive stories. Some of our favorite picks: “Rich Dad, Poor Dad,” “Your Money or Your Life,” “The Millionaire Next Door,” and “Secrets of the Millionaire Mind.”

The Reason: You’re Trying to Keep Up Appearances.


Many people live according to their presumed expectations of others and try to maintain an image that they think they “should” have. (Our writer Sandy Fernández opened up about this in her recent essay: “Are You Acting Your Age?”.) The irony of `keeping up with the Jones's’ is that the Jones are probably trying to keep up with you too, so you both perpetuate the cycle of overspending. 


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