Tips to Keep Yourself from Overspending
We all know that managing money can be a real challenge, especially when we have bills to pay, expenses to juggle, and want to save toward our goals as well. But fear not, because I’ve got some easy tips to help you keep your spending in check. Let's dive right in!
Building a spending plan that works for you:
Creating a plan is essential, but it doesn't have to be complicated. Let's break it down into three simple steps:
Needs: This includes bills, groceries, minimum debt payments, and anything else that is a “have to” pay. Aim to allocate around 60% of your take-home pay to cover these essentials.
Fun: We all deserve a little enjoyment in life, right? Allocate about 10% of your income for eating out, going to the movies, and treating yourself to the things you love.
Future You: Set aside at least 20% of your earnings for your emergency funds, extra debt payments (above the minimums), out-of-pocket medical, dental, eye, vet care, and other needs, and 10% for non-monthly wants like that much-needed vacation or weekend get-a-way, a new laptop, and holiday/birthday/anniversary gifts.
Remember, these percentages can be adjusted based on your current financial situation. The key is to be intentional about where your money is going.
Keeping to your spending plan:
If you have a consistent income:
Save ahead for non-monthly expenses: Plan for those irregular expenses like subscription renewals or insurance premiums by saving a little each month. Divide the total amount by the number of months until the due date, and add that to your "needs" bucket. Create a separate bank account to keep this money safe and earmarked for those expenses.
Separate "needs" money from "fun" money: To resist the temptation of overspending, consider using separate bank accounts for your needs and fun categories. Set up automatic bill payments to come directly from your needs account, and use only a debit card for your fun account so that you don’t need to track every expense to know that you are keeping your spending in check.
If you have an inconsistent income:
Give yourself a regular "salary": Determine a target monthly take-home pay based on your average expenses and non-monthly costs. Save any surplus in a dedicated savings account, building a buffer for months when income might be lower. Gradually aim to accumulate a few months' worth of expenses in this account.
Conclusion:
Managing your money doesn't have to be a daunting task. By creating a spending plan tailored to your situation and employing strategies like saving ahead and separating accounts, you can keep your spending in check and work towards your financial goals. Remember, finding the right approach may require some trial and error, so don't give up. Keep trying until you strike the perfect balance, and you'll be well on your way to a healthier financial future.
If you’d like some help organizing your finances, set up a free 15-minute call to discuss your situation.