How to stop overspending and keep your Budget under control
Are you among them who started their month with a wish to save a lot and found themselves in debt at the end of the month? Are you a chronic Over- spender? If yes, then this article is only for you .
I know there are many who can’t realize that where all the money goes? Why they couldn’t able to save a penny and every month able to pay only the minimum amount of their credit card bill. This is a very strange problem to them. If you ask them the reason, the only answer is “I don’t know, where all the money goes! I didn’t buy anything special this month. But still……………”
Oh yes! This is really a big problem for all over-spenders specially the people in the age group of 20-40s. Here, in this article, I’ll give you some very easy and quick tips. Just follow these tips and I am sure, you’ll get the result from this month only.
1.Track your Spending:
First of all, try to track your last 2/3 months spending. You may need to spend at least 1-2 hours to work on this area . Open your last 2-3 months credit card statements, bank statements, and other cash receipts to locate which items have you bought in last 2-3 months.
Then categorize the items as grocery, restaurant bills, clothes and shoe items, other household items, electronics goods, entertainment expenses, travel expenses, utility bills and other items.
I am sure that you’ll find amount of 2-3 different categories unnecessarily high in each month, may be clothes and shoe category. The reason may be any sale was going on and you have bought some clothes on this sale to save your money. But the question is that by buying the items on sale, are you really saving your money?
Suppose there was 50% sale was going on, you bought a t-shirt for you at $25 which actually costs $50. It doesn’t mean that you have saved $25 but the actual picture is that you have spent $25. The items which you did not need but bought under influence of advertisement and/or friends’ advice or social/peer pressure, are the sole reasons of too much spending money.
So, track your expenses first and find out your weak points and make points on those areas.
2.Make a monthly budget:
Secondly, make a monthly budget. Already you have found out that the average true expenses of each category by deducting the unnecessary expenses from each category. Now make a budget depending on the average expenses areas.
Maintain an excel file for your budget purpose and keep every sheet for every category.
First of all put the budgeted amount for every category in every sheet and write down every purchase under every category on daily basis whenever you make an expense. This system will keep your spending under check.
Follow the budget by heart and stick to it.
3.List out the items before buy:
Plan your purchases before they actually happen. In the beginning of every month, list out the items you need in this month, like- grocery items , items for any special expenses, etc. In the large store/shopping mall, discounts are given on bulk purchases, so you can save a lot by buying the non-perishable items in a single bill in the beginning of the month.
Plan to buy once or twice a week for other perishable items like- fruits and vegetables, fish and meat items, etc. You’ll find this simple system will help you to save 7-10% more savings.
You may also need some more necessary items in the middle of the month. Don’t worry, buy those but before going to shop, make a list always.
Why I am stressing on the “list”? Because this list will keep you away from unnecessary buying.
4.Make the dues clear in the beginning of the month:
As I’ve discussed earlier, identify your short term and long term financial goals with a probable date attached to it. Then make special fund for each goal. Now transfer the pre-determined amount to each fund for investment purpose in the beginning of month as soon as salary credited to your account.
Make your credit cycle bill payment scheduled to 1 or 2 day after your salary credited day or first week of the month (you can adjust your billing cycle accordingly). Make credit card payment, children school fees and other utility payments in the beginning of the month .
This system will forcefully take out your cash from your hand and you’ll have only little cash with you for your daily survival.
5. Make more cash transactions:
Try to avoid credit cards and make more cash transactions. While we use credit cards, we can’t actually feel that cash is going out because physical movement of cash is not happening. As a result, we tend to spend more. So, carry around enough cash for your necessities. This method will help you not to spend on impulsive buys. Once the money is gone, you can stop buying.
6.Avoid paying interest charges on any services, like-credit card:
Always pay the service charges or bill payment with full amount within due date. Don’t pay the minimum amount and attract the interest charges levied on you. Because paying interest charges means paying extra cash . Normally credit card companies’ charges 12% p.a. as interest on unpaid amount and this is a high amount. So, always pay your bill payments in full.
7.Make research on before purchases:
If you want to buy a mobile or any special item, make price and quality comparison before you buy the item. In this way, you will get the best from the possible lowest price.
8.Give yourself time before you buy something:
While roaming with your family members and friends in the malls or market, you may find something attractive and may wish to have it. But before buying that particular item, stay stick on the previous point that “research before buying”. Search online with the same item or move other shops while searching the same type items, make the comparison.
You may feel tired with this system and may find that you are wasting your time and energy for the item which you don’t need actually. In this way, you’ll be able to keep you away from the unnecessary buys.
9.Give yourself a reward:
We all love rewards and grades. Good grades and rewards make us happy and more enthusiastic at work. Use this technique to control yourself. Set a budget maintenance and savings target for yourself at the beginning of every month .
Then put a small reward for you for achieving the target, like – dinner at your favorite restaurant at last Sunday night of the month or a movie out plan with family, etc.
I know, this technique will boost your energy level and will prepare you for the next month journey.
The above tips are not magic and I know that it’s not possible for anyone to completely change himself within a week. But make a commitment first and then follow the steps by heart. I am sure that you’ll become a savvy consumer from a chronic over spender within some months.