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How To Stop Overspending Your Money

Cathie Ericson9-Minute Read
February 21, 2022

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Do you often end up with more month than money? That is, you end the month with more bills than you have money available. It’s a common problem as you aim to cover all your bills and still have a little – or maybe, a lot – fun. But if you routinely have trouble covering your bills, you could be putting your financial goals in jeopardy. If you’re ready to find out how to control overspending, read on.

Signs You Might Be Overspending

Spending more than you should happens to almost everyone at some point. But if you find you’re constantly in a cycle of spending money you don’t have, it might be time to make some changes. However, you can’t change what you haven’t recognized, which is why you’ll need to take a hard look at your spending habits to see if you’re veering into a problem zone. Here are some signs you might want to do a reset.

You’re Neglecting Bills

If you aren’t feeling financially secure, it can be easy to just ignore the bills. But, rest assured, they don’t go away; in fact, they get worse. Not paying them is liable to result in a host of unpleasant consequences, from racking up credit card debt to harming your credit score to even having important services terminated, such as your water, electricity, and even (gasp!) internet.

You Don’t Have An Emergency Fund

Not all overspending happens because of irresponsible impulse buying. It’s far too easy to get caught up in using your credit card for unexpected costs that arise, such as a car repair, a medical bill, or a new laptop to replace one you spilled your coffee on. Unfortunately, putting these expenses on a credit card can just put you in more financial trouble down the road as interest charges mount. Having an emergency fund is the best way to cover these expenses when they arise without further harming your finances. Saving something for a rainy day is always a smart strategy, and you’ll be glad that “umbrella” is standing by when your washing machine is on the fritz.

You’re Maxing Out Your Credit Cards

Yes, an emergency fund is vital to cover surprise costs, but that’s not the only way you might end up running up your credit cards. Some months you end up with a variety of expenses – a night out to celebrate a friend’s promotion, a gift for your mom’s birthday, and then a new dress with a price so good you couldn’t afford not to spend. And yet, these types of expenses are bound to arise every month and continue mounting. If you routinely spend more than you should on your credit card, you’re going to start accruing hefty interest charges and also might end up damaging your credit score. You want to keep your revolving balance low – in fact, the suggested rule of thumb is holding it at less than 30% of your available credit.

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Common Areas Where People Overspend

Overspending can happen any time, anywhere. However, there are some areas where people more commonly spend more money than they should. These three categories present opportunities to take a hard look at your budgeting to potentially cut your spending.


Rent and mortgage typically take the biggest bite out of your budget, and it often feels justified. But even if you feel like you’re spending an “average” amount (did you know the average American spends $20,000 a year on housing living expenses?) that doesn’t mean it’s right for you. Your housing costs should be based on a percent of your income; many experts recommend keeping it around 28%.

If you live in a high-priced area, it might be hard to keep your spending in check, which could indicate you need to move a little farther afield, downsize, or even get a roommate. You also might neglect to budget for maintenance costs, such as repairs, which are a necessary part of being a homeowner. And if you’re renting, it could be a great time to consider buying to take advantage of low interest rates and potential tax savings.


Another necessity – we all have to eat, right? But sometimes we spend more than we should on food, whether it’s because we’re doing too much takeout and delivery from restaurants or impulse buying high-priced items.

The best way to avoid excessive spending on buying food is to do a weekly meal plan, including snacks. Then make a shopping list and compare it to items that are on sale at the grocery store; you might decide to swap out broccoli for asparagus if it’s a better bargain. Going meatless can save your wallet, and also your waistline in many cases. And buying in bulk is a great way to save, but only if you are able to consume the entire bag or box before it goes stale (or you get tired of it). Repacking big boxes into smaller containers can help you avoid overeating, too.

It’s also smart not to shop when you’re hungry because it’s amazing how quickly treats and other high-priced items jump in your cart. The good news is planning ahead can save you a lot on your groceries without skimping on quality or nutrition. And then you might even have a little left over to celebrate with friends on the weekend.


Another weighty budget item might be the amount you spend on transportation. The first area to consider is your car payment – it could be it’s just unmanageable with your current budget. This might be the time to do an auto refinance if it would save you significant money, or you might have to choose a more affordable option. Other ways transportation can eat up more budget than it deserves is by making liberal use of ride share services, rather than public transportation (assuming it’s a safe option) and paying sky-high parking prices downtown. The bus and other forms of public transportation might be a good swap. And, yes, while driving aimlessly listening to your fave playlist can be cathartic, it can add to your bottom line as gas prices rise.

Understanding Your Spending Habits

There are as many reasons people overspend as there are people, but there often are some commonalities. Here are four top reasons people frequently overspend … see if they sound familiar.

You can’t create new behaviors unless you realize why you do the old one. First, you have to make a point of tracking your spending: If you don’t know where your money is going, you can’t change your habits. Then look for your own personal triggers urging you to overspend, such as:

  • Social media: It’s easy to get caught up in “keeping up” when you’re constantly scrolling and seeing what other people have or do. It can be hard not to compare yourself to others, but their finances – and their own budgeting acumen – is out of your hands.
  • Peer pressure: Do your friends try to talk you into buying a new outfit every time you go out, or propose lavish restaurants or trips? Having a budget will make it easier to stick to your guns when someone suggests you buy something you know you shouldn’t.
  • Emotional shopping: Do you love to do a little online window shopping when you get home from a tough day? It might seem like a healthier alternative to eating a tub of ice cream, but it’s damaging to your wellness in its own way – your financial wellness, that is. Just remember the pang of regret you feel when the packages arrive and you realize you shouldn’t have.
  • Binge shopping: However, it’s important to remember that having too austere a budget can push you in the opposite direction, often leading you to go wild and overspend. It’s the same way a solid diet of broccoli and chicken can make a pizza look so appealing. Building in budgetary splurges can help keep the binging at bay.

How To Curb Your Spending

Once you know why your checking account is out of whack, it can be easier to make changes. If you’re wondering how to control overspending, here are a few tips to try.

1. Live Within Your Means

This is far easier said than done, but it’s a long-term strategy to enjoy greater financial freedom for years to come. What are your means? You’ll want to figure out your debt-to-income ratio to have a guide and work toward ensuring monthly spending stays within those parameters. This step can help you create a realistic budget.

2. Create A Budget You Can Stick To

Knowing how much you can spend in a given area is the first step to sticking to it. Take a look at your last few months of statements to help you create a personal budget. Start by listing all your fixed costs (such as rent/mortgage, car payment, debt payments, savings, utilities, etc.) then move on to your variables, like clothing, entertainment, food, and then figure out how much you should be spending in each of those categories. The key is to distinguish between “wants” and “needs” and take care of all the needs, while leaving some wiggle room for a few “wants.”

Making sure to put some in your savings account or emergency fund each month can help you ward off issues with unexpected expenses, like a car repair or vet bill. You also can put budget parameters in place to help you reach short-term financial goals, such as saving for a vacation, a down payment for a house, or even holiday spending.

3. Use Cash Instead Of Cards

It can be all too easy to rack up charges on your credit card or debit card and then be surprised at the end of the month. Using cash can help you keep your spending in check because when it’s gone, it’s gone. One plan is to take out the cash you have allocated for various categories like entertainment, groceries, and gas and put it in separate envelopes. It’s a visual reminder you better cut back on groceries when the specific envelope starts feeling thin.

4. Stop Impulse Buying

The cash system works – but only if you make a note of everything you spent money on. Otherwise your daily coffee and snack or pack of gum at the checkout counter can add up faster than you think. Some impulse purchases do even more damage to your budget, especially when you shop at night when you’re bored or lonely. Make it a habit to have the money in hand before you buy those new shoes or speakers. You’ll enjoy them a lot more if you don’t have to worry about paying for them.

5. Pay Off Your Debt

If you have debt, you’re hardly alone – the average household has more than $7,000 in credit card debt, and that’s just one type of debt. But debt has a way of accumulating in the form of higher interest charges and can harm your financial well-being. It’s vital to make plans to pay this debt off, whether by increasing your income with a side gig, consolidating debt with a personal loan, or just making a solid plan to pay off your higher interest debts first to reap the benefits of lower interest payments going forward.

6. Try A No-Spend Challenge

Want to boost your savings all at once? A no-spend challenge is a fun way to do it. It’s exactly what it sounds like: you pick a period, such as a week or weekend, and vow to not spend any money. That means no eating out, getting gas, buying clothing, etc. Of course, it’s not going to work if you just delay the purchases until the set amount of time passes. You have to want to save money for this to work. Convince your friends or family to join you for even more success, and then you can all put the money you didn’t spend toward emergency funds or another short-term goal, like a vacation you’re taking together. 

7. Practice Gratitude

It’s all too easy to focus on what we don’t have and forget what we do have. When you’re in a cycle of overspending, you often tend to ignore the things you already have in pursuit of something “better.” But appreciating what you have makes it a lot less likely you’re going to want to buy something else.

Being grateful can even lead you to want to take better care of your items, so you can save money on needing a replacement. One of the best ways to feel gratitude is to help someone else who might be struggling. If you’re able to get someone’s check at a restaurant or give to a charity, it makes you feel so good you might be less likely to try to fill an emotional need by spending on yourself.

Make Today The Day

The cycle of overspending can be hard to get out of, but the relief you feel when you do is worth it. It won’t take too long to figure out these new habits – like avoiding impulse purchases and sticking to a budget – aren’t as hard as you think, especially when you focus on the real goal, which is a healthier bank account for your future and the satisfaction of knowing you have everything you need.

Want more advice on getting your finances in order? Check out additional personal finance advice on the Rocket HQSM blog.

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    Cathie Ericson

    Cathie Ericson writes about personal finance, real estate, small business, education, retail/ecommerce and other topics for a host of brands and websites. Her work has been featured on major media websites, including U.S. News & World Report, Forbes, Business Insider, The Oregonian, Industry Dive, Boston Globe, CNBC,, and Yahoo Finance, among many others. Find her