Buying new stuff can be exciting and fun. But it’s not fun racking up a credit card balance that you can’t pay off because you’ve spent more money than you have. It’s tempting to overspend on discretionary expenses like entertainment, food, clothing and other consumables that excite the mind and soul, especially if there’s a credit card in the purse or cash in the bank account because the electricity bill balance is only due two weeks from now. It may also be very easy to say, “No matter if I overspend this month, I’ll make it up again by spending less next month.”

If your overspending habit is regularly causing a mismatch between your income and expenses, change that right now! Overspending is a dangerous habit that can hold you back from attaining financial freedom. In fact, the Insolvency and Public Trustee’s Office under the Ministry of Law cites overspending as one of the three most common reasons why Singaporeans go bankrupt.

Overspending Habit and How To Overcome Them

To truly conquer your overspending habit, it is important to dig deep into the issue and take a look at the background on why you spend more than you should. Here are six common reasons and ideas on how you can tackle the situations.

Problem #1: You have no budget.

A monthly budget can give you an idea of how much you can afford to spend on food, rent, utilities, transportation, entertainment and other expense categories. Without a budget, it can be easy to lose track of the rate your money is flying out of the purse or the bank, and then you overspend.

Solution #1: Take control of your expenses by setting up a monthly budget. The Institute for Financial Literacy offers a budget spreadsheet to help you plan and record your spending limits.

Problem #2: You make impulse purchases.

Impulse buying happens when you make an immediate purchase without having planned for it before going shopping. The National University of Singapore Business School reveals in an article that the ability to resist temptation is at its lowest towards the end of the day. Situations that present high stimulation such as fast-paced music, a distracting store floorplan or website layout, a highly interactive store environment and even overcrowding of shoppers can increase the likelihood of impulse purchases.

Solution #2: Before walking into a store, make a list of the things you really need to buy. Once you are inside, stick to that list. When you see an item that is on sale and you feel tempted to buy, walk around for a while and reflect on whether you really need it. If you are indeed finding it difficult to resist impulse buying, then bring along only enough cash to pay for the things you plan to get.

Read: Stop Overspending – Why “You Deserve It” Is Bad For You

Problem #3: You underestimate small expenses.

Sure, one little splurge will probably not hurt your finances, but those small expenses can easily add up. A cup of coffee may not seem too expensive, but if you buy one or two on a daily basis, the cost can add up to hundreds of dollars a year.

Solution #3: To prevent the cost of small indulgences from sneaking up on you, make it a point to keep track of all of your expenses – both large and small. Keep receipts of your expenses and tally them up at the end of the day. Alternatively and more conveniently, you can use expense-tracking applications on your mobile phone.

Problem #4: You use credit cards too often.

One of the many reasons why you may be overspending is because you think you have more money available than you really do. When you use a credit card or even debit card, you don’t tend to be acutely aware of the amount of money departing your account.

Solution #4: If you think you’re relying too much on paying with your credit card, try paying with cash the next time you buy groceries or go out for dinner.

Problem #5: You do not have sufficient savings.

When the plumbing in your house or the brakes on your car suddenly need repairing, it is crucial that you have ample savings to immediately cover the costs. If you do not have enough liquid funds available, you will probably end up reaching for your credit card or applying for a loan. Emergencies cannot be avoided, but overspending on maintenance costs or hospitalisation bills can be if you have an emergency fund safely socked away.

Solution #5: Set up an emergency fund that you can fall back on. Try to save six months’ worth of your income as a safety cushion in case of serious illness, job loss or an unexpected maintenance bill.

Problem #6: You try to keep up with your neighbours.

Your spending habits can be influenced by the people around you. When your best friend comes over, for example, it is easy to end up going on an unplanned shopping spree or night on the town. This issue will be exacerbated if you have well-off acquaintances around you who can afford things that you cannot.

Solution #6: Instead of showing off your new clothes or car to your friends, share your financial goals with them. This will be a platform to motivate you and your friends to help each other keep track of personal finances. It can be much easier to control your spending habits when you are surrounded with friends who cheer you on.

Read: What Do Millionaires Invest In & Manage Their Money

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C.E.O @ The New Savvy
Anna Haotanto is passionate about finance, education, women empowerment and children’s issues. Anna has been featured in CNBC, Forbes, The Straits Times, Business Insider, INC and The Peak Singapore. She was nominated and selected for FORTUNE Most Powerful Women conference in 2016 (Asia) and 2015 (San Francisco, Next Gen). Anna has 10 years of experience in the financial sector and is currently a Director in Tera Capital. Her previous work experience includes positions at Citigroup, United Overseas Bank, a regional role in Business Monitor and a boutique private equity firm based in Shanghai. She graduated from Singapore Management University (Finance and Quantitative Finance).