Saving the money you didn’t spend is often the forgotten step in the process.
Have you ever wondered why you can’t accumulate savings despite your best efforts not to spend money? Have you wondered how you can stop spending money? If so, you’re not alone. Overspending is one of the most common problems we see on a regular basis. Your effort and restraint are present, but the savings accumulation is absent. Saving the money you didn’t overspend is often the forgotten step in the process. It’s frustrating, discouraging and, over time, can become quite dangerous. What you really need are tips on how to stop spending money.
Saving money and not spending money are not the same. Therein lies the problem.
Problems spending too much money are not uncommon. You are not alone. How not to spend money and how not to stop overspending are likely problems you’ve tried to address in your own life. Again, you are not alone. Spending too much money is no different from any other personal finance problem. Some of us are susceptible to behavior-based financial challenges, and some of us aren’t. The funny part is if you struggle with this particular financial affliction, the solution may change your life. If you don’t struggle with this affliction, the entire concept seems obvious and borderline ridiculous. It’s difficult for us to understand others’ behavior when we don’t struggle ourselves. Either way our financial behaviors are often deep-seated and difficult to change. The good news is that turning ‘I can’t stop spending money’ into actual savings is one of the easiest personal finance problems to fix.
There is a lot of pressure to overspend. From targeting marketing to social media to peer pressure to purchase, you are constantly bombarded with very appealing ways to spend money. This can be very tough to avoid without completely avoiding going online, watching tv, going to stores, and more.
Overspending can result in a lot of fear and denial. Fear that you won’t be able to stop overspending or that you may have a real problem spending too much money. Or on the other side of the coin, you may be in denial about how much you are overspending.
How you were raised to spend your money will greatly impact your behavior in the present. Additionally, education on overspending, budgeting, saving, and so on will determine how you behave as well. Have you ever taken a course on budgeting? Or read a book on personal finance? These factors can determine your overall financial health.
The ‘not spending not equaling savings’ problem comes in many forms. Say, for instance, you decide to take your lunch to work for the next couple of days in an effort to save money. Yet, two weeks later, your savings account is no higher for your effort. Or, say, gas prices go down and you are able to reduce your spending on fuel by $150 for the month, but it doesn’t translate into a savings gain. In both instances, you took only 50 percent of the necessary steps it takes to save money. You’ve gotta complete the job.
Take the example above, if you skip lunch out for a week each day you should transfer the amount you would normally spend directly into your savings account. It may be the most days your lunch is around $10, each day transfer the amount into your savings account. By the end of the week you have not only not overspent $50 on lunches, but you have truly saved $50 toward your goals!
Have you ever heard someone say, “I saved $230 on my shopping excursion today. There were great deals!”? As you know, they didn’t save anything. They simply didn’t pay full price for whatever they were buying. They could save $230, but that would require depositing $230 into their savings account when they got home from the mall.
I think the main culprit is online banking. It has changed the financial world and created some really strange habits. People tend to check their checking account balances way too frequently, and balance overspending ensues. Balance spending describes the practice in which people check their balance with a guess of the balance in mind, then spend money down to what their guess was.
For example, before checking my account balance, maybe I assume the account contains $460, but upon checking the balance, I learn the balance is $870. This revelation causes shifts in spending behavior, despite the fact there are very reasonable explanations as to why the balance is so much higher. In most cases, a transaction hasn't been posted or a check hasn't been cleared yet. If I’m a chronic balance-spender, I’ll likely spend more money because of my unexpectedly high balance.
Imagine walking to your pantry late at night to grab a box of bite-size cookies that you swear is nearly empty. Upon picking up the box, you are pleasantly surprised to learn the box is heavier than you would have guessed. There are plenty of delicious bite-size cookies left! You will eat more cookies. When we’re faced with plenty of resources, we will use more resources than intended. When we’re faced with sparse resources, we will use fewer resources than intended.
When you don’t spend money because of low-priced fuel or a renewed effort to take your lunch to work, you risk creating this “extra resources” feeling within your checking account. And although you didn’t originally spend that particular money, you will frivolously spend it on something else, unless you get it out of your face and into permanent savings.
Every time you realize you didn’t spend money you normally spend, immediately transfer the exact amount of money out of your checking account and into your savings account. Are gas prices low? Then transfer money into your savings account after every fill-up. Did you take your lunch to work? While you’re eating your leftover salisbury steak at your desk, transfer money into your savings account. If you’ve shown restraint and didn’t spend money, you’ve already accomplished the hard part. The easy part is somehow the forgotten step. You need to actually save the money.
Money not spent isn’t necessarily money saved. You must complete the process. This is how you master the overspending beast. By transferring the money you’ll start to feel the joy and excitement of your savings account balance growing. In fact, spend time checking your savings account balance regularly so you can get excited about the number growing. Set little goals for yourself to meet and make sure to pat yourself on the back when you beat the overspending monster.
To learn more about how Your Money Line helps people like you meet their financial goals, learn more here.