Chronic overspending is an emotional, yet serious topic that can lead you down a road of financial disaster. People who tend to forget their own financial limitations become obsessed with keeping up with peers. That type of behavior results in purchasing items they want but don’t need or can’t afford. Regardless of your age, overspending can lead to unmanageable debt, bad credit and other serious repercussions that are hard to dig out from. People who embrace the idea of saving instead of spending tend to live a happier and more comfortable retirement. For many, simple steps such as creating goals, budgets and speaking with a financial advisor will lead them to a more secure financial outlook.
5 Ways To Break Bad Money Habits
Overcoming the desire to overspend is tough, but doable. Individuals need to make saving part of their everyday life. For many, it all starts with being smarter on how and what they spend their money on. Good money habits can lead to financial success. Here are five great tips to help you defeat your urge to splurge:
- Create a budget. Assess and accept the financial realities of your current living situation. Start becoming aware of the money coming in, as well as the money going out; including bills, mortgage, rent etc. Create a practical budget with real limits and restrictions that will assist you in continuing forward.
- Seek out a financial role model. Some people are born frugal and some aren’t. Learn to mimic the individuals who are. Is there a co-worker who brings a brown bag lunch every day? Do you have a coupon-clipping aunt? Whoever it may be, take notice of the little things they do and copy them. The habits that you adopt now will have a major impact later down the road.
- Start saving. Did you know if you save $250 every month in a tax-deferred account from age 22 to 32, and then stop, your money will grow to $1.38 million by 65. A statistic like that should get the hands moving to your pocket faster than before! Once you have a solid foundation for a savings plan, watch and be proud as your investment and savings accounts grow over time.
- Identify the driving factors. Understand the factors that drive you to overspend, and avoid situations that will trigger those factors. Whether it’s from boredom, envy or depression, you need to clearly identify these factors so that you’ll be better prepared to avoid careless spending.
- Speak with an advisor. Overspending is a habit that can have serious repercussions and detour you from a comfortable life and happy retirement. A financial advisor can provide insight and help review your budget. His or her professional knowledge will allow you to manage your income and expenses, and help you create a comprehensive plan.
You Are In Control
Unable to see a physical impact of overspending, consumers can disassociate the financial implications of their purchases. The sheer thrill associated with making a large purchase can have a serious mental impact. For many, the hardest thing to do is to remain on track. Saving money should be a wisely woven web; with each dollar put away the more attractive the end result will look. It will be challenging at first, but you need to stop thinking short-term and imagine the long-term benefits. So you want to change your habits? You want to get your life back on track? Do it! You are in complete control of your financial destiny. Create a budget, seek out a role model, speak with a financial advisor, but most importantly start saving. Your actions will be the stepping stone toward getting and keeping you on track to financial success.