Tips to stop overspending and start prioritizing your financial security

Let’s face it: most of us are guilty of spending a lot of money over certain things that we like, whether we need them or not. It may be shopping for groceries, gadgets or shoes. It’s too easy to get carried away especially when they’re on sale. If left unchecked, this subconscious behavior can lead to unnecessary debt or fighting between couples.

In simple words, overspending is living beyond your means or spending more than you earn. Overspending happens for several reasons and the first step to avoiding it is knowing why we do it. The following are some of the most common reasons why people spend excessively and are unable to work towards their financial security goals.

1. Retail therapy and overindulgence

Retail therapy is one thing we do to relieve stress and wind down after a tiring day. As rewarding as it sounds, it leads to overspending when done regularly. Spending on new stuff can take our minds off of things and make us happy—temporarily. Don’t get use to overindulgence because it will be hard to control later on. Too much emotional shopping can burn your pocket faster than you know it, and you need to be aware of this behavior.

2. Social pressure and status

Trying to keep up with what’s trending and what people are currently into often leads to FOMO or the fear of missing out. Most of us also splurge just to show off our status to others. We unconsciously become competitive with the people around us, and this makes us spend on expensive shoes, bags, clothes or gadgets.

3. Abstract money

By abstract money, we mean the money you can’t hold or touch. In short, your credit cards, which can derail your journey to financial security. Whenever we use them to buy something, we don’t immediately feel the pain of spending. Using a credit card to pay for everything—from bills to shopping, necessities, online purchases—can make us unaware of how much we’re spending and how fast we’re spending it.

4. The sale mindset

Most of us think that we spend less money and save when we buy items on sale. On the contrary, we still spend money and in fact a sale can lead to impulse buying. We don’t realize how much money we’re spending because we’re too focused on the red tag.

5. Reward discounting

We often reward ourselves whenever something good happens or when we achieve our goals. This isn’t a bad thing at all as this can motivate us to continue performing well. However, rewarding ourselves without any real achievement gained can lead to overspending.

Overspending can seem like a hard cycle to break out of—but you can do it. Here are a few tips to follow.

Tip # 1: Specify your goals.

Having specific goals can help curb overspending, as you’re pressured to save money. If you’re aiming to buy a new laptop or go on a trip abroad, these goals can compel you to save. Another big goal may be to retire early and enjoy a leisurely life with your family, in which case you need to prioritize investing and your financial security. FWD Life Insurance’s Manifest and Set for Life, both investment-linked insurance plans, help you invest in diverse funds that may potentially have higher returns than a traditional savings account—while giving you life protection.

Tip #2: Separate your wants and needs.

Setting these apart can help suppress your overspending behavior by giving light to your priorities and the things that can be set aside for a later time. By doing this, you realize that you do have the money for more important things like insurance premiums.

Tip #3: Set a budget.

Having a budget and sticking to it can help you spend smartly. Setting a budget doesn’t necessarily mean you’re restricting your spending, it’s just prioritizing what you really need.

Tip #4: Wait for a few days.

If you feel like buying something at first glance, it’s best to wait a few days before purchasing it. This will give you ample time to think about whether it’s a good purchase.

Tip #5: Instill discipline in yourself.

Having discipline when it comes to money is extremely helpful especially if you have big goals like buying a house. Being disciplined is beneficial to your lifestyle as well, as you can pay all your bills while able to set aside for your future too. Finding the balance between spending and saving is a great feat to achieve.

Know more about how to protect and invest in your future by consulting an FWD financial expert. Or check out FWD’s affordable and easy-to-buy insurance products here.