Figuring out how to stop spending money can be tricky, especially if you’re overspending without even realising it. Without a clear plan of action, you’ll likely keep facing an empty bank account month after month.
We have some tips and ideas to help you take a closer look at your spending so you can make healthy changes.
1. Understand what excessive spending is
According to a survey by Perkbox, money is the biggest cause of stress for Brits. And while many worry about not having enough or not being able to save, 22% of Brits say they spend more than they should and then worry about the impact on their finances.
Excessive spending is often connected with impulsive or emotional spending: buying things you don’t necessarily need because they make you feel momentarily better.
Emotional spending can be a major issue. Many people use it to cope with stress, deal with loneliness or feel better. According to Investopedia, emotional spending is often used as a replacement for other unhealthy behaviours, such as overeating or drinking, but it can be just as harmful if not addressed properly.
2. Figure out whether you’re overspending
To stop overspending, you first need to look for signs that you’re spending more than you should. One clear sign is not knowing where your money is going. If you repeatedly reach the end of the month in the red, it’s time to sit down and look at your income and expenses.
Another clear sign that you need to stop spending so much money? Finding things in your home that you don’t remember buying. Brand new items still in their boxes or with tags attached that you completely forgot about could indicate that you’re buying on impulse and getting things you don’t really need.
If you need a clearer insight, take a look at the 50-30-20 budget rule. This spending guide suggests spending 50% of your income on living expenses and sending 20% to savings. The other 30% is discretionary spending: money for shopping, going out to eat or joining a gym. Track your expenses for a month to see where your money is going. If you’re spending more than 30% on ‘wants’, you might be overspending.
3. Find other ways to deal with stress
If you’re using shopping as a way to deal with stress, finding alternatives could help you figure out how to stop spending money. This could mean using apps to improve your mental health, going out hiking or running, or taking up gardening. Also, eat more healthily, sleep more and make time for a cup of tea at the end of the day.
4. Save before you spend
A good way to stop spending so much money is to make less of it available. Before you do anything else, send money to your savings account. It doesn’t matter how much you can afford. Even if you can only send £100 a month to savings, that’s £100 less than you would be spending on things you don’t need.
5. Budget for your occasional wants
Instead of allowing yourself impulse buys, budget for things you truly want. This will not stop you from spending money, but it will make you more aware of how you’re spending it.
You can use budgeting apps and calculators to help you figure out how much to save. For example, rather than indulging in a daily gourmet coffee or magazine, set a savings goal for a weekend away or a good pair of winter boots and then budget for it.
