How to Stop Spending Money: 10 Ways to Resist Overspending

During the past year, record-high inflation has forced Canadians to examine their budgets more closely. While we’ve seen an increase in the prices of the products and services we use daily, many consumers have realized they were spending too much on non-essentials.

While certain economic factors are outside our control, there are ways to stop overspending and reduce financial stress. Here are ten things you can start doing today to help you stop overspending and save money.

1. Track Your Spending

Many people have no clue where their money is going because they’re not keeping track. They often have an idea that they’re spending too much because there’s no money left at the end of every pay cycle, or they find themselves having to use their credit card or line of credit in between paydays.

If you want to improve your spending habits and save money, you must first figure out where your money is going. To do this, print off a 90-day bank account history and credit card statements for any cards you use.

Sit down with a highlighter and a calculator, and calculate how much you spent on discretionary items during the past three months. Discretionary items refer to anything that wasn’t a necessary expense, like a mortgage payment or utility bill.

Add up how much you spent at restaurants, coffee shops, sporting events, clothes, or other shopping items. But be warned; the results may shock you. One problem is that it’s too easy to overspend when using debit and credit cards to make purchases. 

Once you’ve figured out where your money is going, you can begin to take steps to reduce your spending.

2. Create a Budget

Many people are overwhelmed when they hear the word “budget.” But budgeting doesn’t have to be complicated. When you make a budget, you create a plan for your money. You’re deciding in advance where to spend your money and why.

There is no right or wrong way to budget, so choose a method that works for you. Budgeting apps like YNAB and Mint can automate much of the process, or you can create your own budget using a spreadsheet or the old-fashioned way – pencil and paper.

I prefer the zero-based budget method, which assigns every dollar to a job, whether it’s spending, debt reduction, or savings.

3. Avoid Impulse Shopping

Impulse shopping is a trap for many people because we are emotional beings, and our money is closely tied to our emotions. Some people buy impulsively when experiencing an emotional high, while others shop to make themselves feel better. Either way, making purchases when you’re too high or too low is not a good idea.

But how does one resist the urge to impulse shop? Unfortunately, online marketplaces like Amazon make it far too easy these days. You don’t even have to leave your house.

There are several things you can do to avoid buying on impulse. Here are just a few ideas:

• Delete the Amazon app from your mobile device
• Create a cooling-off rule (e.g., whenever you see an item, commit to waiting a week or two before making the purchase.) This way, the rational side of your brain has time to overrule the emotional, impulsive side.
• Never go grocery shopping while hungry
• Leave your credit card at home
• Stay away from the mall or a big box store to browse – only shop when you need to purchase a specific item.
• Beware of the marketing tricks stores use (checkout stand at the grocery store, sales rack, etc.)

4. Practice Delayed Gratification

Society tells us that we should have everything we want right now. Why wait? You deserve it. Your forever home, the luxury SUV, that all-inclusive vacation every winter. It’s a costly way to live. But you don’t have to follow society’s rules.

By practicing delayed gratification, you avoid an impulse decision now in order to receive a more valuable reward down the road. Here are some examples of where delayed gratification can save you a lot of money over the long run.

• Waiting a few years before upgrading your house, even though the bank will approve you for a bigger mortgage today.
• Driving your vehicle until it wears out.
• Not trading your phone every two years for the newest model.
• Taking fewer vacations today so that you can retire ten years earlier

You can practice delayed gratification for small things, too. For example, you could avoid buying the Starbucks flat white in the afternoon and reward yourself with a nice dessert after dinner in the evening.

If you still need convincing, consider this: According to Psychology Today, many studies have shown that delayed gratification is a common trait in highly successful people.

5. Set Financial Goals

Financial goals act as an incentive to spend your money wisely. For example, if you set a goal to save $3000 in the next 12 months so that you can go on vacation with a few friends, your savings goal will motivate you not to squander money on other things.

You can set short and long-term goals, like saving for a house down payment, your children’s education, or retirement.

6. Avoid Buying Items on Sale

I included this in the section on impulse shopping, but it deserves its own mention. Many people justify overspending because they purchased an item on sale. If it wasn’t a regular, planned expense or an absolute necessity, you’re still overspending, even if it is on sale. You have less money than you would if you didn’t make the purchase at all.

This is a common trap people fall into, as it messes with our emotions. If we want something, the fact that it’s marked down makes it easier to justify the purchase in our minds. Unfortunately, these situations often lead to regret down the road.

7. Put Away the Credit Card

If you’re a long-time blog reader, you know I’m a big believer in the benefits of using a credit card. Used properly, you can earn thousands of dollars of rewards and other perks, which can help you save money on everything from travel to groceries to gasoline purchases.

However, if you’re not careful, it’s easy to get into trouble with credit cards. If you can pay the balance in full every month, you’ll avoid taking high-interest debt that can be very difficult to pay off. No amount of travel points will make up for paying 20% interest on a credit card.

So, if you know that having your credit card on you when you shop will tempt you to overspend on items you can’t afford, leave the credit card at home when you go out.

8. Reduce the Money You Spend at Restaurants

This one may sound like I’m telling you that you can’t have any fun. I’m not suggesting that you never eat out at a restaurant or stop buying lattes. But be mindful of how often you are spending money on these things. Are you going to a restaurant once or twice a month, or four or five times a week? If it’s the latter, it may be the reason you’re overspending.

If needed, cut back on eating out. It’s a form of delayed gratification. Eating out less each week means you’ll have more money to do other things later.

9. Curate Your Social Media Feed

People go to great lengths to display their “best life” on social media platforms like Facebook and Instagram. But not only are the images we see unrealistic, but they can also stir up feelings of FOMO or envy. If you’re tempted to overspend based on what celebrities, or your friends, share on their social media feeds, consider taking a break from social media. If you don’t feel like you can do that, unfollow or hide posts that make you feel worse about your situation.

And remember, social media is not reality.

10. Buy Used Whenever Possible

I saved one of the best ideas for last – buy used whenever you can. We live in a disposable society. Big ticket items, like electronics and appliances, are no longer built to last. But you don’t have to buy new. Online marketplaces like Facebook Marketplace and Kijiji have made it easier than ever to purchase gently used items at a fraction of the cost of buying new ones. You can save hundreds, even thousands, of dollars, by buying used furniture, appliances, tires, sports equipment, tools, vehicles, you name it.

How to Stop Spending Money: Summary

By implementing my ideas, you can resist compulsive spending, reduce your monthly expenses and save money. As you work through these tips, try to identify your spending triggers. Do you tend to buy on impulse? Is retail therapy something you struggle with?

Remember that it’s okay to spend beyond your fixed expenses. You’re allowed to have fun sometimes. Problems arise when you don’t have a spending plan and don’t know where your money is going.