Abu Dhabi, UAEFriday 10 April 2020

How to stop overspending for good

With 2020 under way, now is a good time to trim how you spend your income every month

While cashless shopping is convenient, it can be a serious budget-buster. Getty Images
While cashless shopping is convenient, it can be a serious budget-buster. Getty Images

Overspending can be a serious downer for your budget.

Just like the person in the cinema or on an aeroplane that repeatedly kicks the back of your seat: it’s annoying, distracting and ruins your experience.

But that doesn’t mean you should stop spending entirely, just as you don’t have to stop going to the movies altogether or flying on planes. You just need to pick your purchases (and maybe your seats) more carefully.

It is so easy to buy on Amazon. But you can put in your own safeguards to keep you from doing that.

Jane Boyd Thomas, Winthrop University

Now that 2020 is underway, here are some elements you can kick out of your budget and some other changes to consider to ensure overspending is a thing of the past.

Avoid easy purchases with one-click shopping

Cashless shopping is convenient, but it can be a budget-buster. This year, make it more difficult to spend money online, as this could help cut out some of your impulse purchases.

“It is so easy to buy on Amazon,” says Jane Boyd Thomas, professor of marketing at Winthrop University in the United States. “You know, one-click shopping. But you can put in your own safeguards to keep you from doing that.”

For example, don’t save your credit card in your online retail accounts. And think twice before using mobile payment methods such as Apple Pay. If you have to pick up your physical credit card or part with tangible cash, you might pause and reflect on whether you really want to spend your money on that item.

Banish excess groceries

The next lifestyle cost to tackle is frivolous foods. If you’ve been guilty of throwing away groceries that have gone bad, you’re probably not shopping as efficiently as you could.

“Try eating your way through some of your food,” says Natasha Knox, a member of the Financial Therapy Association’s board of directors and founder of Pax Planning i the US.

“If you are throwing stuff out regularly, you are overshopping on groceries. One hundred per cent.”

How can you fix it? Make a grocery list before you head out to the supermarket. Plan out your meals for the week ahead of time and pick products with long shelf lives.

And be realistic, Ms Knox says. If you’re probably never going to whip up that gourmet meal you saw a chef make on TV, don’t buy the ingredients for it — only for them to be thrown out. You can find plenty of recipes online that require minimal effort and experience.

Be selective about luxury

Some handbags are more expensive than others. Some paper towel brands are pricier than others. In just about any store or shopping mall you browse, you’ll find options for products of varying prices.

Ms Knox recommends figuring out which high-quality products you really love and only allowing yourself to spend highly on those. Then, be willing to compromise on the rest.

“Everything can’t be as important as every other thing,” Ms Knox says. “So some things have to give.”

Change your perspective

This category is not about cutting a particular bill to cut from your budget. Rather, it’s a mindset you should remove from your spending habits.

“Stop thinking of yourself as a consumer,” says Tim Howes, professor in the College of Business at Johnson & Wales University’s Rhode Island campus in the US. “Stop thinking of yourself as a shopper. You’re an individual.”

According to Mr Howes, that means focusing less on things to buy and more on non-monetary aspects of your life, such as how you spend your time and the relationships you build.

“It’s really being intentional about every dollar you spend,” he says. “Does this add value to my life or not? When you start to figure out that what matters is relationships, more than material things … you start to change your mindset about what matters.”

It’s easier if you change your perspective, Mr Howes says. Instead of thinking of skipping that trip to Starbucks as a sacrifice, focus on how you’re actually saving time and money.

Now get started

However you lighten your spending in 2020, the first month of the year is a good time to reassess your budget.

“Maybe for some people expenses over the holiday season were particularly high,” says Deeksha Gupta, assistant professor of finance at Carnegie Mellon University's Tepper School of Business in the US. “Your bank account could be lower than usual, causing you to take pause and evaluate your budget.”

If you don’t know where to start, Ms Thomas recommends writing down all of your spending for at least one month. This exercise can help shed light on where you’re spending — or overspending.

“It’s very painful and very tedious, but it’s very eye-opening," she adds.

Updated: January 18, 2020 01:11 PM

SHARE

SHARE

Most Popular