Consumer IQ, Goals

Breaking the Overspending Habit

Lots of bad habits lead to overspending, but you already knew that. Countless blog posts and finance articles provide ways that you can cut back on your expenses. The problem with most of this content is that the one simple truth to overspending is never addressed. That simple truth? To stop overspending, you have to realize that you are overspending to begin with.

Most people who buy small items every day aren’t aware of how quickly these small purchases add up. Until you make the decision to take a close look at your expenses, the money that you spend daily may go unnoticed.

Sit back for a moment and think about those things that you buy every day. You know, those small “necessary” items. Now, think about how much those items cost you on a daily basis. Multiply this number by 365, and the realization that you are overspending will slowly seep in.

Now that you’re aware of your overspending habits, you can put the following money-saving tips and tricks to good use. Let’s start with that beloved morning coffee.

1. Your Coffee Habit: Whether you stop at the closest $2 drip coffee joint or you fork over $5+ for a special latte drink, your coffee habit can break you. Just multiply $2 by 7 to result in $14. Then, take that $14 and multiply it by 52(weeks), and you’ll find that you’re spending over $700 per year on coffee — and that’s the conservative drip coffee price.

2. Your Electric Bill: Do you keep your air conditioner or heater running while you are away from home all day? Not only is this bad for the environment, it’s also bad for your wallet. By setting timers (these can be purchased at any hardware store), you can control your heat and air conditioning system to turn on and off according to your schedule. You can save up to $30 per month on your electricity bill by timing your heat and air (that’s $360 per year).

3. Dining Out: Sure, it’s nice to kick back with a slice of pizza on a Friday night, and that’s just fine. However, if you turn that once-per-week ritual into a three-times-per-week ritual, you’ll be spending more than you bargained for. You can save at least $100 per week if you learn to cook. Can’t cook? Spending some of that take-out money on a basic cooking course is a wise investment (your body will thank you too!).

4. A Little Lavishness: Do you love to shop for the latest electronic device or for the one fashion item that all the magazines say you “must have?” Instead of going on a spending spree once or twice per month, put your money aside to save up for something that you really want. You’ll spend less money, and chances are you’ll get something great in the long run.

5. Where the Cell Phones Roam: Shutting off your smartphone is a hard habit to break, but there’s no need to check your email or update your Facebook status when you are in roaming country. If you find yourself putting a lot of money toward a high cell phone bill each month, activate airplane mode when you roam out of town. 

Realizing that you have an overspending habit is more than half the battle. Taking the steps to cut back will help you win that overspending fight. You don’t have to give up your way of life, but you do have to step back and ask yourself “do I really need to purchase this?” Before you know it, your bank account will be back to its former glory.

Do you want some extra money in your pocket each month? Walk through this five step program to find financial freedom.

Harriette blogs via Contently.com.