Identify. Address. Avoid.

It’s vital first to understand the sources of unnecessary overspending. Once identified, the areas of concern can be addressed, and the triggering actions can be avoided. If you’ve ever scrolled through your social media feed before getting out of bed in the morning, you probably already know where this is going…

Buying on Impulse 

Social media news feeds are stocked full of targeted product ads just waiting for you at the end of every scroll. Before you know it, you’ve flushed $43 down the drain on some mythical, life-changing product that’s likely a scam, all before even getting out of bed. If that doesn’t sound like you, how about the big-box store or pharmacy run? You go into the store and don’t bother to grab a basket because you are just running in for one item. In no time, your arms are full, a store employee asks if you need a cart, and the sudden realization sets in—you’ve fallen victim to overspending before getting to the checkout. One way to combat impulse spending in-store is to plan your shopping trips with a list—and stick to it. Staying on task with a plan can help you avoid getting sidetracked.

If impulse buying doesn’t contribute to your overspending, let’s consider some additional culprits:

First-Class Marketing

Don’t be fooled into thinking this doesn't apply to you because you tend to stay off social media on Sunday mornings. Ever get sucked into an As Seen on TV commercial while watching cable or streaming on your favorite devices? Get in the car to go grocery shopping and hear a radio ad for the same product. Then just when you think you are in the clear—you come face-to-face with the product by nearly toppling over the display case as you make a sharp turn into the next aisle. Let's not forget the bombardment of emails from your favorite retailers with carefully crafted messaging to trick you into thinking you’re going to miss out on the “lowest price ever” for that item you’ve had your eye on but probably don’t need. Live above the influence of feeling pressured into spending in the moment. Chances are—there will be another unbeatable sale next month.

If patience isn’t your strong suit and waiting until next month is out of the question, start small and give it a day. When you wait at least 24 hours before making a purchase, the impulse factor is eliminated, and you give yourself time to think through the need as well as plan for it in your budget.

Not Tracking Spending

If you were to walk away after reading this article with only one key takeaway—let it be this: Failure to track spending is one of the easiest ways to fall victim to unnecessary overspending. A 2020 survey conducted by Intuit Mint¹ found that 65% of Americans said they didn’t know how much money they spent in the prior month. In a similar study conducted by The Penny Hoarder² in 2021, 55% of survey respondents reported they didn’t use a budget to manage their money—not surprisingly, 56% reported not knowing how much they spent the previous month. The survey went on to detail, “those who kept a budget were more likely to know how much they spent last month and were less likely to say they had splurged on something that hindered their ability to pay bills.” Sensing a pattern yet? Tracking your spending is crucial not only to staying on budget and avoiding overspending but also for your overall financial wellbeing.

True wealth is built when you spend less than you make, and to do that, you need to be aware of your spending and curb or eliminate expenses that are blowing your budget.³ 

Retail Therapy & Lack of Self-Awareness

We’re all guilty of feeling the need to splurge a little when we are feeling down or spend a little extra when we have reason to celebrate. But what happens when that one-off becomes more of a trend in disguise? Ever notice patterns in your spending habits of times or locations you are vulnerable to overspending or feel guilty afterward? Emotional spending can get the best of us from time to time. A 2020 study on Mental Health and Personal Spending⁵ found over 49% of Americans made purchases in an attempt to spark happiness, with 30% of those regretting it. When we lack self-awareness of our spending habits, we will continue to set ourselves up for failure and, in situations, high-risk for impulse spending. Know your triggers and work to avoid them. If you are susceptible to the procrastination bug and find yourself scrolling through shopping apps instead of getting that big assignment done, your emotions may get the best of your budget.

Knowing your triggers is only half the battle. Once identified, it is pertinent to take steps to avoid them. Whether it’s making your money harder to access or deleting those shopping apps altogether, making it more of a challenge to spend is a significant first step.

Instant Gratification & Convenience

It’s safe to say the days of patiently waiting for dial-up internet to connect to the world wide web are long gone. The demand for max-bandwidth this and high-speed that has crept into our everyday lives—and we’re willing to pay for it. According to a 2021 LendingTree⁴ consumer survey, more than three-quarters of Americans placed an order with an on-demand delivery service in the previous year. Of the 77% who placed an order, 70% reported they were willing to spend extra money to save time and effort. So, what is the cost of convenience? The study found that most would cap their additional spending on delivery between $50-$100 per month.

The kicker—29% of Americans admitted to spending more than they can afford on delivery services. The study concluded that, on average, consumers were paying $157 per month on delivery services—that’s nearly $2,000 per year spent on convenience alone! An even tougher pill to swallow—when broken down by demographic, Gen Zers and millennials both spent over $200 per month on average. Meanwhile, parents with children under 18 paid the most, averaging over $3,000 per year ($260 per month). With that kind of premium placed on convenience alone, this would be a great place to start for those looking to curb their overspending.

If you fall into the category of those who spend extra on delivery, ask yourself whether it could be avoided by planning ahead? Every once in a while is different than a developing pattern. Take a look at your spending habits and see how much can be saved if you were to plan your shopping trips or meal delivery ahead of time.

Paying With Plastic or By App

This one should come as no surprise—by far one of the easiest ways to spend money you don’t have. We have already established how critical tracking spending is regarding staying on budget and avoiding overspending. The same concept can be applied here. When we use cash for everyday purchases, it’s physically present to be seen, felt, and kept track of. If you are paying by card in-store or online, you don’t get that final buffer of accounting to know exactly what you’ll be left with once the transaction is complete. Plus, it doesn’t hurt to have peace of mind that, at the very least, you won’t be wracking-up overdraft charges or maxing-out lines of credit. Which is much more than can be said when limiting yourself to only using credit, debit, and virtual means of payment.

Track your spending frequency when you start allocating certain purchases to be made with cash instead of card. Challenge yourself and take it a step further. Try keeping your cash in high denominations as opposed to smaller bills—the results may surprise you.

The Bottom Line: With new payment platforms emerging by the day and infinite sources of temptation, overspending has never been easier. Practice Safe Spending.

Coming Up Next:

How to Stop Spending Money—Part 2: 7 Tips to Curb Your Overspending

This information is for informational purposes only and is intended to provide general guidance, and does not constitute legal, tax, or financial advice. Each person’s circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments regarding the matters related to your condition.

1. mint.intuit.com
2. thepennyhoarder.com
3. thebalancemoney.com
4. lendingtree.com
5. self.inc