How to Control Your Spending


It’s often the case that I find people asking me how to control spending. The answer is simple of course – just don’t make purchases. That’s not really enough help for those who spend above their budgets and want to fix things but cannot seem to do so. The best way to control your spending habits is to be open and honest with yourself, your spouse, and even your kids. Being realistic takes practice. The following steps will help you.

Take That Hard Look

- A good way to put a stop to overspending is to take a long, hard look at what you are spending. Here are some tips to follow:

- Pull out your credit card statements, bank statements, and receipts. Create a list of the main categories of spending, such as groceries, eating out, utilities, etc.

- Allocate each item you’ve purchased to a category. You will quickly see how much you are spending in which categories.

- Make a list of all of your income sources.

- Add up how much you are spending per month in all expenses.

- You will be able to see, in print, the differences in what you are spending, where you are spending it and what you are bringing in.

This is a hard step to take – it’s simply not easy to realize where you are spending money until you see it in print.

Determine Why You Are Spending

Ask yourself why you are overspending. If you are spending too much on eating out, it may be because you haven’t taken the time to plan a menu, buy groceries or to plan a schedule that allows you to make dinner at home.

On the other hand, some individuals need to consider their specific emotional attachment to the act of shopping. Are you addicted to this? Does it provide some type of emotional benefit to you when you shop?

Are you:

- Do you shop because it provides an emotional boost to you. Do you feel good when you shop?

- Does it provide an outlet, a way to break away from everyday life?

- Do you have self-regulation problems or trouble controlling bad habits?

- Do you see it as a way to socialize because you lack any real attention or interaction with others?

If so, you may need to investigate why this is and, most importantly, what you can do about it. In some cases, shopping addiction requires professional treatment.

Cut Up the Cards and Use Cash

Perhaps the most difficult decision to make is to live a cash lifestyle. This means you cannot pay bills, go out to dinner, or make any purchase unless you have the cash on hand to do so. This is challenge for many Americans because society is so credit-driven. However, if you do cut up the credit cards, you could help to curb your spending habits. Here is why.

Cash is simply harder to spend. If you go to the store and see something you want, you may pull out a credit card and purchase it knowing you do not have to worry about paying for it for a while. On the other hand, you may second-guess that purchase if you only have cash in your hand. This cash lifestyle can make it far easier for you to control spending.

This is not easy. In fact, in most situations, it is downright hard to do especially at first. However, if you try it even for a few days, you will see the significant improvement it can make in your financial life.

Can You Do A Budget?

Budgeting is hard work, too. However, to control your spending, it is essential to consider the budget as a tool, not as that dreaded thing you do on the weekend. Here are some tips to making it work.

1. Do it together. You and your partner should sit down and discuss the process together. That way, everyone is committed to it.

2. Be realistic. Be sure to give yourself an allowance every month for entertainment, gifts, and other purchases you usually make.

3. Work on it as a family. Be sure the kids know that you are sticking to a budget. That means no purchases of extra items they do not need.

Why do it? A budget seems like a lot of work, but it will show you exactly where you need to cut your spending and how you can save money. It will tell you how much you have to spend each month on the various categories. By putting this in place, you put a virtual brake on your spending habits.

Realize What You Could Have

Finally, take a long hard look at what you want or wish you could have. Do you want a long retirement touring the world and living somewhere warm? Do you want to be able to pay for your child’s college education? Do you just want the creditors to stop calling? Sit down and write out some specific goals for yourself. What are your biggest dreams financially?

Now, look at how your spending is hurting those dreams and ambitious.

- You are spending 20 percent or more on your credit card purchases than you would need to have. That means, for every $100 you spend on your credit cards each year, you could be paying $20 towards your goals instead if you used cash.

- If a family of four eats out four times per week then that could mean spending $200 or more per week on dinners out. If you cut that in half (just in half!) you could be putting $100 a week more into your savings accounts and earning interest on it.

- If you took the extra money you save from eating out, not buying that high end coffee or skipping those extra purchases and put it towards your retirement (perhaps right out of your paycheck) it could earn you thousands of dollars over 10, 20 or more years.

Can you really afford not to control your spending? It’s hard. It’s much easier to live in the now. But, doing this brings you so many more rewards.