Hosting parties, taking vacations and chasing retail deals are just a few common ways you can quickly derail your budget. It’s OK. Everybody strays from their spending plan at some point. The key is minimizing the damage and taking the right steps to make sure that you quickly recover. These fixes will help you learn how to stop spending money and get back on track.
1. You Went on a Shopping Binge
Maybe your favorite store was having a sale. Or perhaps you were buying gifts for nieces and nephews. Whatever the reason, racking up credit card debt after a buying binge is an easy — and fast — way to break the bank.
The Fix: Cease and Assess
After a period of heavy spending, it is important to (temporarily) part with the plastic. Freeze your spending until you’ve assessed your existing debt and financial goals. This will help put a stop to your overspending habits.
2. You Paid for Major Car Repairs
Or a new roof. Or a pricey vet bill for your four-legged friend. Fill in the blank with any unexpected expense, and you’re suddenly this close to depleting your hard-earned dollars. Life happens. It’s just a matter of being financially prepared for it.
The Fix: Start an Emergency Fund
Adding money regularly to an emergency fund account is one of the most important ways to keep your spending on track. Even small amounts put away each month can make a difference when unpredictable costs strike. Your bank can even set up automatic withdrawals to be put into your emergency fund.
3. You Made too Many Impulse Purchases
We’ve all done it. Bought a glossy magazine at the grocery store, picked up a last-minute latte, purchased three pairs of shoes instead of one. (“They were on sale!”) It can sometimes seem like retail temptations lurk around every corner.
The Fix: Create a Spending Plan
Not a budget. A spending plan. This can help you learn how to track your spending more effectively and make your financial strategy feel more flexible and optimistic. It even allows for on-the-fly purchases if you can’t avoid them. Allocate expenses into named categories (i.e., utilities or entertainment) and review the average amount you spend in each category every month. Set monetary ceilings that align with your financial goals to keep you from overspending.
4. You Maxed Out Your Credit Card
It goes without saying that it’s more convenient to pay for things with a credit card. But that’s also why it can so easily lead to overspending. We’re not aware of how each purchase — big or small — accumulates. It’s only at the end of the month when we’re staring at a high credit card balance that reality sets in.
The Fix: Use Cash
Cash is proven to be harder to part with than plastic, and limiting yourself when you shouldn’t use your credit card will help you learn how to stop overspending. Write your spending plan categories on envelopes and put in only as much cash as you have allocated for the month. If you run out, then you know you’ve reached the maximum amount you wanted to spend.
5. You Have No Idea Where Your Money Goes
In our busy, overly scheduled lives, keeping track of every little expense, from a $1 lottery ticket to an electric bill, is often the last thing we have time to do.
The Fix: Download an Easy-to-Follow Budget App
A free app like Mint (available for Android and iPhone) can help you keep track of your money by showing you where you stand on your spending plan and current cash flow, what you have available to spend and alert you whenever you have a pending bill or low balance in one of your accounts or spending categories.
Need help fitting your insurance coverage into your financial plan? Connect with your local Farm Bureau agent today and strategize for your family’s future.