Let’ be honest whether it’s buying Valentine’s Day gifts, being roped into Black Friday sales or treating yourself to a weekly dinner out – if your overspending can get a bit much it’s like time to tighten the reigns a bit. As a South African consumer, it can be very easy to fall into a debt trap, especially with the rising cost of goods. However, overspending can lead to financial stress and even bad debt, which can significantly impact your life. The good news is that there are several strategies you can use to avoid overspending and keep your finances on track. Before we get started on strategies to avoid spending too much, let’s understand a few basic finance terms.

What really is overspending?

Overspending is the act of spending more money than one earns, or spending more money than one can afford to pay back. This can lead to financial stress and the accumulation of debt, and can negatively impact a person’s overall financial health. Overspending can occur due to a variety of reasons, such as impulsive buying, a lack of budgeting and financial planning, or living beyond one’s means. To avoid overspending, it’s important to have a clear understanding of one’s financial situation, make a budget, prioritize spending, and be mindful of spending habits.

What is debt?

Debt for a consumer refers to the amount of money owed by an individual to creditors for items purchased on credit, such as loans, credit cards, and lines of credit. Consumers may use debt to finance large purchases, such as a home or car, or to cover everyday expenses. When a consumer takes on debt, they are responsible for repaying the borrowed amount plus interest over a specified period of time. It’s important for consumers to manage their debt responsibly by making timely payments, paying more than the minimum due, and avoiding taking on excessive debt that they can’t afford to repay. Unmanageable debt can lead to financial stress and difficulty in paying bills, so it’s important for consumers to understand the terms and conditions of their debt and to make a plan for repaying it in a timely and responsible manner. If you’re still a bit stuck on understanding debt and other financial terms, read our A-Z guide.

8 ways to avoid overspending:

1.   Make a budget and stick to it

The first and most important step to avoiding overspending is to make a budget. A budget helps you to track your income and expenses, so you know exactly where your money is going. It’s important to be realistic when making a budget, so be sure to include all of your regular expenses, such as rent, groceries, utilities, and transportation costs. Once you have a budget, stick to it as closely as possible. If you find that you’re overspending in a particular area, adjust your budget accordingly.

2. Prioritize your spending

Once you have a budget, you can prioritize your spending. This means that you allocate your money to the most important expenses first, such as housing, food, and utilities. You should also consider the value of each purchase, so you can make informed decisions about where to spend your money. For example, spending money on a gym membership might not be as important as paying for rent or groceries.

3. Don’t max out your credit card

It can be very easy to max out your credit card when you have an upcoming birthday celebration, Valentine’s Day gifts to buy or even just feel like treating yourself. Try your best to always pay your credit card back on time and most importantly don’t feel the need to max out your credit limit. If you’ve tried everything to get your credit health back on track with no luck, there is still light at the end of the tunnel – our credit health course. Get all the tips & tricks you need to take charge of your financial health.  

4. Track your spending

Tracking your spending is another important step to avoiding overspending. You can use apps, spreadsheets, or simply write down your expenses in a notebook. Keeping a record of your spending can help you see where your money is going and make changes if needed. If you need a budget app to help track your spending and make way for saving, then read our post on the 5 best budgeting apps available in South Africa.

5. Avoid impulse purchases

Impulse purchases can be a major contributor to overspending. To avoid impulse purchases, make a list of what you need before you go shopping, and stick to it. If you see something you want but it’s not on your list, wait a few days before making the purchase. You might find that you don’t need it after all.

6. Get discounts where you can

Using coupons and taking advantage of discounts is a great way to save money and avoid overspending. However, you should only be doing this for things you really need. Don’t get suckered into Black Friday sales when you don’t even need the items.

7. Don’t pile up the subscriptions

Subscription services, such as gym memberships, Netflix, and Amazon Prime, can add up quickly. While these services can be convenient, they can also be a source of overspending. Consider cancelling any subscriptions that you don’t use regularly, and look for free alternatives.

8. Do your research

If you’re struggling to avoid overspending, do your research online, enrol in a short course to get your credit health back on track or chat with friends and family and ways they make sure to cut back on spending. Disciplines and research are going to be your friends through this journey.

Now that you’ve followed a couple of our tactics, it’s important not to get distracted by shiny objects. Stick to your guns, prioritise your financial well-being, and make sure you are tracking all your expenses and practising self-control when it comes to your spending habits.

If there are any other questions you may have about overspending or any helpful tips you may have, pop us a message on our Money Money Simple Facebook community.