How to know and how to fix a spending problem.
If you’ve ever checked your bank account and wondered where all your money went, or how you could possibly have such a small sum, you may have an unintentional spending problem. And that’s harmful because overspending can lead to mass amounts of debt and dissatisfaction with yourself.
But how can you know for sure if you have a spending problem? If you’re surmising the thought, ask yourself these questions:
- Are you having a hard time following a budget?
- Do you feel the need to shop every day or more than once a day?
- Do you buy things when you’re sad, angry or other emotion to justify feeling that way?
- Are your friends and family commenting about your spending or telling you to stop?
- Are you going over your credit card limit on a monthly basis?
- Do you ever wonder, “Where did my last paycheck go?”
- Do you have a hard time finding a place for all the items you buy?
- Do you avoid looking at your bills?
- Do you have a range of items you don’t use?
- Are collectors and creditors on your case about past-due bills?
If you answered yes to any of these questions, you may have a spending problem. Follow these tips to take steps toward cutting back on your spending:
Get rid of your credit cards – If you know you use plastic for most of your purchases, it’s advised that you cut them up and only carry cash. Yes, credit cards are convenient, but research shows that you spend less when you only have cash. According to a 2000 study, consumers are willing to spend more for something when they use a credit card rather than cash. So next time you’re out, test this theory by leaving your credit cards behind and only bringing with you a small amount of cash.
Track your spending – This is especially useful for those who can’t fathom where their money is going whenever they check their statement. Simply jotting down what you spend every day will help you identify patterns. Did you grab a coffee before work? Head to the mall on the weekend? Get a car wash? Every penny you spend should be written down and added up to see how much you’re doling out each day. If you’re a techie, you might like keeping an online diary or downloading a journaling app to your smartphone.
Purge – If it’s clothes that you buy a lot of, go through your closet and dresser drawers and make a pile of all the items you haven’t worn in the last year or those that you don’t like anymore.
“Identify the clothes you love, and get rid of everything else,” says author Donna Smallin. “If you haven’t worn something for a year, there’s something wrong — it’s not your style, or it doesn’t fit right — and there’s no point in holding onto it.” You might find that most of your clothing items are in pristine condition, and if that’s the case, head to a local thrift store, who will offer you money for certain items. You’ll feel better and make a little extra cash in the process. If any of the clothes you want to get rid of are slightly ripped or stained, then you may consider donating them to charities.
Purge — the online version – You know all those daily deal e-mails that are clogging up your inbox — Groupon, RetailMeNot, etc.? Unsubscribe to these. These e-mails are marketed to make you want to spend money, and you don’t need that kind of temptation. Doing this may also help you realize how many e-mail lists you’re on, which can be eye-opening to an overspender who wasn’t sure whether or not they had a spending problem.
Avoid situations that make you spend – If you’re aware of when you spend the most, try to skip those occasions as much as you can. For example, if you tend to overspend when eating out with friends, suggest to the group you’d like to have a potluck dinner party instead. Or, if you dish out money on clothes more than anything else, it’s best to keep away from the mall at all costs.
Seek help – There’s no shame in speaking with a professional about your spending habits. If your spending is too far out of control, then you’ll likely benefit from talking to an expert. Many psychotherapists are trained to help people with compulsive spending. Also, ask your friends, family or spouse for their help as well. After all, it’s hard to change your ways without support from your loved ones.
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