Overspending. It’s a problem more of us deal with than we would like to admit. We’ve all been there – the guilt and stress that comes after hitting “purchase” on something we don’t need. It leaves our bank accounts depleted and keeps us stuck in a vicious financial cycle.
I know because I’ve been there. For years, I struggled with overspending habits preventing me from getting ahead. But everything changed when I realized one simple yet powerful thing: I needed to shift my mindset about money and spending.
When I was finally able to change the way I thought about my finances, my spending habits changed, too. No longer did I feel the urge to buy every little thing I wanted? I became intentional and purposeful with where my money was going. Most importantly, I stopped sabotaging my financial goals with needless purchases.
In this article, I’ll walk you through the mindset shifts and practical strategies that helped me conquer my overspending in hopes it can help you do the same.
The Damaging Mindset Behind Overspending
For most over-spenders, the root of the problem is psychological, not just behavioral. Without realizing it, we develop certain beliefs and perceptions about money that fuel poor spending habits.
For me, I had the mindset that because I worked hard, I deserved to buy whatever I wanted, no matter the price tag. I equated spending money with rewarding myself, even when I couldn’t afford it. I saw wants and needs as the same thing. These dangerous money mindsets set me up for financial trouble.
I also used spending as an emotional crutch. Have a bad day? Some online shopping would make me feel better. Stressed? Treating myself to a spa day would help me relax. I spent more when I was coping with difficult emotions.
Furthermore, I didn’t have any financial planning in place. No budget, no savings goals, no big-picture vision for what I wanted. It was easy for every paycheck to disappear on random, unimportant purchases when I wasn’t proactively allocating my money.
The Real Impact of Overspending
As you can imagine, my lack of self-control and planning wreaked havoc on my finances. Here’s what overspending cost me:
- Thousands in credit card debt that took years to pay off
- Constant stress about money and regret over purchases
- Inability to save or invest consistently
- Missed bill payments from over-drafting my accounts
- A bad credit score that prevented me from getting approved for loans
The emotional toll was equally draining. I felt guilty every time I mindlessly spent money. I was embarrassed by my mounting debt yet felt powerless to change. I wanted to take control of my finances but had no idea how to break the overspending cycle.
The Mindset Shift That Changed Everything
The turning point happened after a terrible spending binge. I had $200 left until payday, but I still went on an online shopping spree and spent $300. Seeing my account balance drop into the negatives was my rock bottom moment.
I realized I would never get ahead if I didn’t change my mindset about spending. I decided then and there to implement a “needs vs. wants” system. I would only spend on actual needs until I got my overspending under control. Wants would have to wait.
This mindset shift sounds simple, but it made a huge impact. Previously, I saw little distinction between needs and wants. Everything felt justified in my mind. Finally, differentiating needs from wants clarified what purchases were necessary and what was me giving in to temptation.
I also started allocating money to savings first rather than what was left over. By setting aside money for future goals, I became more mindful about how I spent the remainder. I no longer saw it as “extra” money since it had a purpose.
Ultimately, I adopted the mindset that just because I wanted something didn’t mean I should buy it. And I learned to find fulfillment in free or low-cost activities that didn’t involve mindless spending.
Strategies to Change Your Spending Mindset
Shifting your inner money mindset is the key, but it also helps to have practical tools and strategies to support your new thinking. Here are the tactics that helped end my overspending habits:
Track Your Spending
The first step is awareness – analyzing where your money is going each month. Keep a detailed spending log for one month—every coffee, online order, grocery trip, etc. Tracking your spending helps you identify waste and see spending patterns. You can’t improve what you don’t measure.
Make a Budget
Now that you know where your money is going, make a budget to dictate where it should go. Budget how much you’ll allocate to needs like bills and groceries, and then what’s left can go to wants. Having set spending limits will curb the urge to overspend in any category.
Set up automatic transfers from your checking account to long-term savings accounts. Removing savings first helps control spending of what remains. Ensure your emergency fund and retirement accounts are funded before spending on wants.
Delay Non-Essential Purchases
When you feel the urge to buy, institute a mandatory waiting period. For any non-essential purchase, wait 24 hours before buying. This creates space to ask yourself if you need it or want instant gratification. The urge will often pass.
Unsubscribe from promotional emails. Shop only what’s already in your closet. Avoid stores and websites that tempt you. Controlling access to shopping opportunities reduces temptation triggers. Stop getting credit card offers that enable more spending.
Studies show people spend less when using physical cash instead of cards. The tangible feeling of parting with paper money keeps spending in check. Take out a set amount in currency each month for non-fixed expenses.
How Mindset Change Transformed My Finances: A Case Study
To show the power of these mindset and habit changes, here’s a case study showing the transformation it created for me:
- Over $8,000 in credit card debt
- No savings
- Spending 100% of paychecks
- No budget
- Making minimum card payments
- Bad credit (620 scores)
- Frequently overdraft accounts
- Constant financial stress
- Paid off all debt in 14 months
- Built 6-month emergency fund
- Automated savings deposits of 15% of income
- Made and followed a budget
- Only use debit and pay credit cards in full
- 740 credit score
- Approved for a first mortgage loan
- Savings for retirement and other goals
- Significantly reduced financial stress
The mindset shifts helped me form new habits that turned my finances around. It took some trial and error, but I could finally break the overspending cycle that had held me back. I now feel empowered and intentional with how I manage money. It’s amazing what else can change when you change your mindset first.
Take Control of Your Finances with a Mindset Reset
As you can see, overspending is rarely just a money problem. It’s the result of perceptions, beliefs, and attitudes we have about spending. But by making purposeful shifts in your mindset, you, too, can gain control of your finances.
Examine your views on spending. Would you benefit from resetting your money mindset? What specific changes could help end overspending habits?
Make today the day you start down a new financial path. You can change your money mindset and stop sabotaging your goals. Develop a needs vs. wants system, make a spending plan, save first, and spend less. You’ve got this! Here’s to financial freedom.