01 June 2023
How to Avoid Overspending!
Have you ever gone out to the supermarket to pick up a bottle of milk, but found yourself leaving having spent about £20 on junk food? Most of us have been there, but did you know that consistently doing so is not only a bad habit, but bad for your finances? With more households in the UK having to watch their spending in today’s financial climate, it’s more important than ever to monitor those impulse buys and overspends! Here, Smart Money Cymru have compiled a list of a few things you can consider to curb the cost of overspending!
Why do we overspend?
First of all, it’s important to recognise where your behaviour is coming from in order to resolve it. Many simply don’t keep track of their finances well enough, or they don’t budget, meaning they actually have no idea what they’re spending on what, at all. Others might be aware of their spending habits but can’t quite hack them. But here are some of the most common reasons!
Habit is probably one of the biggest reasons we overspend! Do you need to visit your favourite coffee shop every morning before work? Or have takeout every Friday? How’s about that habit that isn’t so great for your lungs or your bank? Habits are hard to break, we know, but rewiring your mind to perhaps, take your own coffee in the morning, or have a go at cooking your own takeout, or even investing in nicotine patches for a while, could save you in the long run!
So, you’re sat at work on a Friday afternoon, all of your work is pretty much done and suddenly you find yourself scrolling through that sale that’s come through on your emails. Perhaps you’re sat at home on a Saturday and take a little wonder into town for a browse- it’s all down hill from there. When you’re bored, why not try starting up a new hobby? Or instead of walking into town where the shops are, walk around the park or along the beach (there’s plenty in Wales!) Doing those things won’t tempt you to spend money you don’t have.
Ever found yourself shopping when you’re down and a bit depressed? Shopping is a very common way that people distract themselves from their emotions and give themselves a quick lift in the process. But why does that happen? It’s all because of dopamine – a hormone that makes us feel good. This is released before we even make a purchase. The issue? Unless you learn how to stop spending money on unnecessary things, your dopamine hit will be followed by a crash of guilt. Even worse. So perhaps lay off the “treat yourself” attitude when you’re feeling upset, and perhaps take a walk or use some mindfulness techniques instead!
The internet has made it far easier these days to overspend and impulse buy, especially when you’re fed with the promise that it can get to your door by the next day! All it takes is a few clicks and suddenly your money has left your account, without even having to interact with it! Trust us when we say to ditch those shopping apps on your phone, and always ask yourself do I need it and can I afford it, if the answer is no to either, think about the purchase first and come back to it later. If you even remember to!
Marketers know exactly what they’re doing and how to hit a nerve, it’s what they’re trained to do after all! They’ll often use FOMO (fear of missing out) tactics to get you to purchase quickly so you don’t have time to think about what you’re doing! Phrases like “limited availability” or “this offer ends tonight” are common offenders. The same rule still applies, go away, think about it, and come back later – chances are, the item is still there and if it isn’t, you’ll likely find it again somewhere else!
Social media can be incredibly influential on how you spend your money – from “marketplaces” in apps such as Instagram and TikTok, to using your favourite influencers and celebrities to market items and brands to you that you don’t really want. It doesn’t end there either – social media can make you think you’re not “in” if you don’t have the latest clothes or items, making you feel like you have to purchase those things. If you feel this way, why not go outside, and remind yourself of what real life looks like? And remind yourself that a lot of these people are paid to wear these items or are wealthy enough that they can afford to wear them.
What do we overspend on?
Supermarkets are planned out in a very specific way with one goal in mind: to get you to buy as much as possible, even if you don’t want or need it. Companies pay premiums to be on POS shelves, and supermarket bosses are constantly reshuffling layouts to get you to parts of the store or items you might miss. You may also find sweets and magazines close to checkouts to tempt you whilst you’re waiting in line with your kids!
The average household in the UK spends about £212 per month on just eating out alone, including take-outs. We all know that take-outs aren’t necessarily healthy, and the trip to the restaurant is expensive, so why do we do it? Convenience is the top reason. Usually when you finish work on a Friday afternoon, the last thing you want to think about is cooking. Sitting down watching the telly on a Saturday? Takeout time! If it’s convenience that’s having you struggling to stick to your budget, why not do meal prep so you don’t have to think about it throughout the week? Or, if you have kids, why not make that pizza takeout into a family fun occasion, and make pizza together?
Of course, we all need clothes, but do we need so many of them? Unfortunately, many of us feel the societal pressure to buy the latest shoes or styles, including designer clothes we may not be able to afford. What ends up happening however is that, not only do you overspend, but many of the clothes end up unworn and often resold on apps at a lesser price than what you brought them for. Similarly, when you catch yourself buying on impulse, go away and think about it first. Even better when it comes to clothes, why not have a rummage through your wardrobe and rediscover some of your old clothes first?
There’s often a sense of status attached to having the latest iPhone or games console – perhaps you want to keep up with the latest games! This tends to cause us to buy new tech before we’ve outgrown the previous versions (we know someone who’s had their iPhone now for four years and it still works fine!). The issue really comes in when these items are low in stock, as was the infamous case of the PS5, this means two elements of psychology come into play – scarcity tactics and also social proof. Because everyone wants to be one of the lucky first few who managed to secure the new PlayStation console! But also, you will buy it when it comes in stock without thinking about as you are worried whether you’ll be able to get it! Next time you’re asked by your supplier to upgrade your phone, why not consider a sim only instead if your phone works fine? And do you really need the latest PlayStation if your PS4 works just as well? If you must buy gadgets, why not consider going refurbished first?
So, the next time you think about buying something yo0u don’t really need, think about walking away to come to your senses first. Thinking of eating out conveniently? Why not rewire how you think about cooking and prep – even better, prepare a list before you go to the supermarket next time, so you don’t find yourself buying things you don’t need! If you think budgeting would help, why not check out our Budget Planner money tool to help you and check out our blog all about budgeting!