The US SEC once said that 65 million households might fail to realize at least one major life goal. According to the agency, a lack of proper financial planning will be the main deterrent.
A 2019 study by the Federal Reserve found evidence that this prediction still holds. It reported that at least four in 10 households would be unable to deal with a $400 unexpected expense.
One of the best ways to avoid finding yourself in the same boat is to learn how to stop overspending. At the same time, you’d also want to master the art and science of how to save money. In doing so, you can reduce your risks of wallowing in debt, and instead, be closer to achieving your life goals.
On that note, we created this guide detailing some of the best ways to mitigate your spending. Read on to learn how to get your budget under control so that you can keep more cash flowing in instead of out.
1. Tabulate Your Expenses
According to the Bureau of Labor Statistics, the average 2019 income before taxes was $82,852. The average annual expenditures, on the other hand, amounted to $63,036. That puts the average discretionary income at $19,816.
The thing is, a lot of that “leftover” income often goes toward non-essential stuff. A perfect example is an exorbitant cable TV service, which at the very least, can cost $60 a month. Premium plans, on the other hand, can have a monthly rate of at least $100.
That’s just for TV, so imagine how much more you could be overspending on other things. That’s why you need to know what exactly you’re spending on.
An expense table or list provides you with a deeper insight into your financial standing. It lets you determine where exactly your money goes and how much of it goes toward such expenses. This knowledge can then help you figure out which costs you can and should cut back on.
Start by tabulating fixed expenses, which are the things you spend a fixed amount on. These include fixed-rate loans, such as mortgages (or rent), car loans, and personal loans. Fixed-fee services and utilities, like phone, Internet, and cable TV, are also part of this list.
Then, list all your variable costs, like groceries, food, services, entertainment, and utilities. Shopping expenditures are also variable expenses, regardless of the product you purchase.
Once you have this table, you can then start altering and adjusting each item on the list.
2. Keep Tabs on Your Food Purchases
In the US, as much as 30% to 40% of the food supply goes to waste. That represents over 130 billion pounds of wasted food. That also means that each person in the US wastes around 400 pounds of food each year.
So, do yourself, your wallet, and the environment some good by limiting food wastage. You can do this by buying only the appropriate amount that your household needs, say, per week. However, it’s best to stick to purchasing only two to three days’ worth of fresh or perishable goods.
3. Cut Ties and Cords
You might want to follow suit, especially if you only watch a few channels. Besides, you can stream news, videos, and movies if you already have Internet service.
4. Don’t Underestimate Discount Coupons and Deals
In February 2020, 31% of US households opted for online grocery delivery or pickup service. That equates to 39.5 million households, a 145.3% rise in online grocery shoppers from the year before.
If you’re new to online shopping, you may be overspending not only on purchases but shipping too. Keep in mind that at the very least, courier fees cost about $6. If you order once a week, that’s at least $24 on shipping expenditures alone.
Fortunately, many merchants and brands offer legit online coupons and shipping deals. For example, you may be able to use a Bath and Body Works free shipping code to zero out your courier fees. Walmart, Whole Foods, Lowes, and Giant also typically roll out these money-saving offers.
5. Activate Mobile Banking App Restrictions
Banking apps come with security features that let you restrict cash outflows. They help prevent fraudulent activities, such as unauthorized purchases. However, you can also use them as a way to stop overspending money on excessive online shopping.
For starters, these restrictions require you to specify a limit on how much you can take out of the account. When you reach this “cap,” you can no longer use the same account for more purchases. This, in itself, already helps you avoid overspending.
To deactivate the restriction, you would have to go through several security protocols. An example is multi-factor authentication, which you’d need several devices for. You may have to input a code from an email, another from a smartphone, plus a “face code” or fingerprint.
Since deactivating restrictions can get tedious, you may end up not wanting to do it anymore. You’re even more likely to give it up if what you’re planning to buy isn’t really essential.
6. Automate Wire Transfers to Your Savings Accounts
Another great trick on how to stop overspending money is to intentionally make it “scarce.” You can do this by automating transfers from a spending account to a savings account.
This way, you’ll have less access to your discretionary income. Plus, you’ll be able to grow your savings faster.
Follow These Hacks on How to Stop Overspending Now
Technology has made it easier to overspend, but it also makes it easier to save. So, as early as now, take advantage of your banking apps’ security features. Their use isn’t only for your security; it’s also a great strategy on how to stop overspending.
Of course, you still have to practice self-control; otherwise, you won’t be able to stick to your budget.
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