Do you dread checking your bank account at the end of the month? Many of us are guilty of overspending, with British households paying out on average £900 more than they received in income in 2017. That’s a shortfall of nearly £25bn.
With contactless payments and one-click online checkouts taking over the way we buy, spending money is certainly getting easier. If you find yourself out of pocket, you may need to consider alternative financial options to get yourself back up and running.
Here are five of the most common causes for overspending, plus handy tips on how to combat them.
Fear of missing out (FOMO)
We’re social creatures. We want to feel involved. When your colleague suggests after-work drinks or a friend proposes a spontaneous trip away, it’s easy to feel as if you’ll be missing out by saying no.
Social media is a big culprit for FOMO. If you’re a sucker for spending because your friends are, try having a break from your feed or impose a ban during the times when you’re most vulnerable.
Not having a budget
If you’re not tracking your spending, you may simply lack awareness of how much small expenses like coffees and lunches are adding up to. You may also underestimate or feel caught off guard by one-off payments such as car insurance renewal.
Start making a note of all your outgoings, and break them down into categories to help you identify areas you could cut back in.
Making yourself feel better
Retail therapy is a go-to solution for many of us when we don’t feel ourselves. Our financial health is very closely linked to our mental health, however, and overspending on disposable items could leave you even more stressed out than you were before.
The next time you feel as if you need a bit of a boost, try to find contentment in simple inexpensive activities such as running a bath or listening to your favorite playlist. You can still treat yourself every now and then but try to factor this into your budget.
Buying on impulse
A lot of our spending is based on split-second decisions. Business owners know this all too well and often set up stores to capitalize on our impulses. Do you often pick up a chocolate bar at the till, for example?
The easiest way to counter impulse shopping is by going in with a plan for what you want to buy and stick to it. Avoid going food shopping when you’re hungry too!
Not having savings
Your emergency fund is meant to be for exactly that – not that new pair of trainers that you’ve wanted for months. If you lose your job or your car breaks down, you’re more likely to get into debt if you don’t have any savings to cover it.
Try to allocate part of your budget to savings. Around 10% of your income is a good figure to aim for.
Are you ready to rein in your overspending? Keep your eye on these five causes to help get your accounts in order.