Advertiser Disclosure
Advertiser Disclosure: The credit card and banking offers that appear on this site are from credit card companies and banks from which MoneyCrashers.com receives compensation. This compensation may impact how and where products appear on this site, including, for example, the order in which they appear on category pages. MoneyCrashers.com does not include all banks, credit card companies or all available credit card offers, although best efforts are made to include a comprehensive list of offers regardless of compensation. Advertiser partners include American Express, Chase, U.S. Bank, and Barclaycard, among others.

How to Stop Overspending & Get Your Budget Under Control



Are you a chronic overspender? If you start each month with great intentions and spend according to a set plan, but eventually find yourself making mindless purchases justified by that ever dangerous “a little won’t hurt” attitude, you’re likely facing an empty bank account and severe buyer’s remorse by the end of the month.

Once you realize you’ve chipped away at whatever cushion you had in place, you’re left scrambling for money – or worse, using credit cards to cover your bad moves. Overspending is often a learned behavior that can result from emotional issues (“I’m in a bad mood, so I’m going shopping”), family upbringing (“I couldn’t afford much as a kid, but now I can”), or even lifestyle inflation (“I got a raise, so I deserve a new car”). It’s not always easy to recognize your own negative patterns, so take some time to check your behavior and determine whether you’re overspending each month.

Signs of Overspending

1. Your Budget Doesn’t Add Up
You’re responsible enough to have a personal budget in place, but are you responsible enough to follow it? If you budgeted $100 for clothes but spent $300, that extra $200 is coming from somewhere, meaning your splurge could be affecting crucial expenses such as utilities, groceries, or your retirement savings contributions.

2. Your Credit Cards Are Maxed
Maxing out your credit card means not only are you living an unsustainable lifestyle, but you’re using additional resources to fuel your overspending. It also means you’re accruing interest and possibly incurring expensive fees for hitting your max. When your spending is no longer about what you have in your wallet, but how much you can get your hands on to continue buying, it’s time to make a change.

3. You Only Pay Your Credit Card Minimum
When your credit card balance is so high or your budget is so tight that you can only make your minimum payment every month, you’re overspending. If you put a $1,500 flat-screen TV on a credit card with a 12% APR and you pay it off at $50 per month, it’s going to take three years and just under $1,800 before your balance is eliminated. A willingness to assume long-term debt just because you want something you can’t really afford is a tell-tale sign of overspending.

4. Your Credit Card Debt Exceeds Your Monthly Income
If you’re earning $5,000 per month but have $12,000 in credit card debt, you’ve been spending too much. Your monthly income should always be higher so you can make those credit card payments in full along with all of your other debts and financial responsibilities.

5. You Splurge on Fun Stuff, But Neglect Bills and Fixed Expenses
Pay before play. Financially savvy people understand the importance of paying fixed expenses before purchasing fun items such as clothing, electronics, and vacations. If you find yourself heading to the mall and treating fixed expenses as an afterthought, you’re probably a habitual overspender.

6. Your Expenses Rise With Your Income
Throughout the course of your life, you’re sure to enjoy new jobs, raises, children leaving home, and maybe even a windfall or two. If each increase in income also comes with an increase in your lifestyle-based expenses, you’re eating into whatever extra you’re getting.

7. There’s More in Your Closet Than in Your Bank Account 
Do you have 14 pairs of designer shoes and a rack of clothes that still all have the tags on – and also an empty bank account? Investing more in your closet than your retirement savings or emergency fund represents damaging financial behavior.

8. You’re Resistant to Change
If you’re reading this list and recognizing some of your behaviors, but are feeling defensive or dismissive, you could be an overspender. To some folks, spending money makes them feel important, happy, and fulfilled – and who wouldn’t want to continue the behavior that sparks those emotions? What overspenders don’t realize, however, is that they’re heading down a dangerous path. Change can be scary, especially if you’ve overspent for a long time, but it’s essential if you want to live a financially healthy life.

Live Financially Healthy Life

How to Curb Overspending

Admitting you have an issue is the first step in taking control of your money. Of course, that’s easier said than done, but there are some concrete measures you can take to help keep your spending in check and improve your financial habits. Take it from a former chronic overspender: It may not be pretty, but the process is worth it.

1. Create a Budget (or Improve Your Existing Budget)

Taking a hard look at what you bring in versus what you spend is a crucial first step. Seeing how much you’re blowing on clothes, electronics, and other luxury items can be a major wake-up call.

Here’s a simple process to get you started:

  1. Start a Spreadsheet. Whether you do it online, with Excel, or just on an old-fashioned piece of paper, create a spreadsheet to categorize different expenses and types of income.
  2. Add Up Pay Stubs. Calculate how much you’re bringing in each month from salary, wages, tips, and any other sources of income.
  3. Gather All Your Bills. Get your utility, credit card, mortgage bills, and whatever else you have to pay each month. Start by making a category for fixed expenses and tallying them up first.
  4. List Your Variable Spending. From entertainment to clothing, and from groceries to gas, start allocating funds to each variable spending category. Base your numbers on how much you’ve spent in the past, but also try to reign things in a bit. Don’t start out too strict though. I find that if my budget is too tight, I’m just setting myself up for later splurges and eventual failure.
  5. Put Some Money in Savings. Don’t forget that a good budget also allocates money to savings. Try following the “50/30/20” rule: 50% of your monthly income should go to fixed and necessary expenses, 30% to fun stuff and lifestyle choices, and 20% to savings and paying off debts. Talk to a financial planner about what type of savings vehicle is best for your financial goals – a regular savings account for emergency expenses and an IRA for your retirement should help you get started.
  6. Test Your Budget. Leave space beside each budget entry and enter the actual amounts you spend going forward. Compare them to what you’d planned and adjust your numbers for the next month accordingly.

2. Switch to Cash

By switching to a cash-only envelope budgeting system, you’re forcing yourself to stick to the plan – when your money runs out, you’re done spending. Get a bunch of envelopes for all your variable expenses and label each one according to how much you’ve allocated in your budget. Then, put that amount of cash inside for the next week.

Alternatively, you may prefer to simply keep all of your weekly money in one envelope and draw out a few $20s here or there as needed. Just do whatever helps you best stick to your budget.

3. Forget Your Credit and Debit Card Numbers

When shopping online, there’s no greater convenience than knowing your credit card number by heart. Forgetting your numbers makes it slightly less convenient to buy things, and in the few seconds you’re reaching for that wallet you just may reflect upon the decision you’re about to make.

If you already know some of your numbers by heart, cancel your current cards and request new ones. Then, go through your favorite Internet shopping accounts and remove your saved information so you can avoid the temptation of purchasing with a single click.

4. Choose Cheaper Entertainment

Overspenders may avoid the urge to change their ways because they think it means no longer having fun or hanging out with friends. That’s just not the case. While you may not be able to splurge on that couple’s cruise or eat at your favorite four-star restaurants anymore, you can still be social and live a full life just by making cheaper plans.

Is the conversation any less meaningful if you invite your friends out for a cup of coffee instead of a pricey dinner? It’s okay to let the people in your life know that you’re trying to spend less – after all, you probably tell folks when you go on a diet because it helps increase your accountability. The same goes for your budget. Who knows, you might even find some of your friends or family grateful for the example you’re setting.

5. Set Short-Term Financial Goals

Someone who puts a new laptop on a credit card with little intention of paying it off immediately isn’t usually concerned about the future. Overspenders are all about the “here and now,” rarely devoting serious reflection on how their habits may affect them in the long-run.

However, by setting some feasible, attainable short-term goals, you can motivate yourself to save and change those habits:

  • Save at least 15% of each paycheck in a separate account.
  • Stick to a cash budget for two weeks.
  • Save $1,000 in an emergency bank account.
  • Bring lunch to work every day for a week instead of ordering in.
  • Remix your wardrobe for an entire month without shopping.

Short-term goals like these can help fundamentally shift how you view and use money. They can also be a bit of a challenge, so pat yourself on the back whenever you achieve one. As you become more money-savvy and less impulsive, you can begin to set longer-term goals for the future.

6. Zero Out Your Accounts

As an overspender, your mindset may be, “If I have it, I’ll spend it.” That’s why I “zero out” my accounts each month. No, it doesn’t mean I spend until it’s all gone – but I find a home for every dollar in my checking account so I’m not tempted to make thoughtless purchases.

Deposit your paycheck in your checking account, and immediately start “telling” it where to go. If you’re on a cash budget, withdraw the necessary amount. Then, pay your bills. To avoid the temptation of blowing the rest, move it to other accounts, such as a savings account and a retirement fund. Ensure that every dollar has a home, leaving you essentially with a $0 balance in your checking account at the end of every month.

7. Think Context

Now it’s time to try and think about spending in a different context. When you’re faced with a potential purchase, compare it to the more useful things you could buy with the same money, or to the energy you expended to earn it, and you might think twice about splurging.

Suppose you want to spend $2,000 on a spontaneous vacation: If you make $20 per hour at work, it would have taken you at least 100 hours to earn that cash – not factoring in taxes. That $2,000 could help you get out of debt, start a retirement fund, or even buy a car. Understanding the value of money to your personal financial picture is an essential element to changing the way you think about spending.

8. Reward Yourself

Suppose you go on too strict a diet – you’re going to be very tempted to splurge when the right temptation catches your eye. The same holds true for spending. Yes, suddenly putting yourself on a strict budget can help you save money – until you go nuts and end up on a shopping binge.

It’s okay to give yourself little rewards now and again to stay on track. If you love clothes, put a little cash aside or load up a prepaid debit card for a reasonable shopping trip. If you tend to splurge on fine dining, plan one night each month to nosh at your favorite restaurant. Love to travel? Reward your good behavior by surfing around for last-minute deals or taking a day to explore what your city has to offer. This is your financial version of a cheat meal, so take advantage of it.

Reward Oneself Sometimes

Final Word

I like to think that I’m a completely reformed overspender, but the urge to swipe my card does occasionally appear. You can’t completely reform your bad habits overnight. However, simply acknowledging them and making a commitment is a great first step toward learning to stop spending beyond your means. Set goals and put safeguards in place, and you can slowly but surely make the move from chronic overspender to savvy consumer.

Are you an overspender? How do you curb the temptation to splurge?

Jacqueline Curtis writes about edtech, finance, marketing, and small business strategy. With over 14 years of copywriting experience, she's created content and scripting for organizations such as GE, Walgreens, Overstock, and MasterCard. She lives in Utah with her husband, three kids, and an overzealous springer spaniel named Penelope.