“The problem is not that we don’t know how to earn more; the problem is we don’t know how to spend less.”
Have you noticed that the more you earn; the more things you want to have, and the higher you spend? Your desire to have more. It may come from a desire to look good for other people, or it’s your own self-satisfaction.
There’s nothing wrong in buying and acquiring the material (and non-material things) that you want, anyway, that’s the reason why you are working hard, right? The problem only arises is if you spend most of your earnings without allocating anything to save or invest for your future.
3 Problems If You Spend Money Too Much
There are many problems with spending too much money, however, in this article, I will only share three:
- Spending too much money will trap you to a lifelong routine of getting up in the morning to go to work because you need to earn money to sustain your daily needs. If you are happy with the thought of working until you are in your 50’s or 60’s, then it won’t matter. However, if you want to retire young or get out of employment as soon as possible (whether to put up a business or enjoy life), then you have to be mindful on how you spend your money now.
- Spending too much money will leave you struggling for money (or financial crisis) when you suddenly lose your job or an emergency arises, such as illnesses, global crises and disasters. These are certain things which are out of your control, and if you are not prepared for it financially, it will be a big source of your financial worries and stresses in the future.
- Spending too much money won’t make you financially stable and free. The benefit of being financially stable and free is it saves you from worrying about money. And as such, you are able to live and enjoy life as you want to. Unlike when you are not financially stable and free, money will always be a source of your problems, worries and anxieties. Not having money prohibits you to do or have the things that you want.
5 Ways to Stop Spending Too Much Money
If you are guilty of spending too much, the good news is you can always begin to change now. And to help you get started, here are some ways to stop spending money too much:
1. List down all the things you need and want to buy.
If you notice, when you don’t have a list, the tendency is you buy whatever you see or feel like buying. Oftentimes, when you get home after shopping, you realize most of what you bought isn’t what you really need or want.
Keeping a list of the things you need to buy makes you aware and focus when you are out shopping. Thus, it avoids you from shopping what you don’t need and helps you to be in control of yourself in order to avoid compulsive buying.
2. Revisit your shopping list. Identify those you need from those you can live without.
Many times you fall into the habit of compulsive buying because you don’t know how to distinguish the things you need from those that you can live without.
So if you want to spend wisely, the next time you shop or write your shopping list, be mindful if you really need it or not. This activity will save you a lot of money if you make it a habit.
3. Set a shopping budget or limit both for your needs and wants
To help you not to spend money too much, set a budget or limit on how much you will spend for your needs and wants. Needs represents those necessary expenses you can’t live without, like food, toiletries, etc. While wants represents those things you want to have but can live without such as expensive bags, clothes, shoes, etc.
For example, if you earn $1,000 per month, you may want to limit your spending to your needs up to 30% or $300 while 5% or $50 for your wants. And the next time you shop, keep in mind this budget you’ve set and have the discipline of not to spending beyond your limit.
4. List down all your expenses and account the total each month
Another way to keep your spending’s low is to monitor it, by listing down every single purchases that you make. This may be too much work for others but it’s actually not that time consuming. Also, it’s very effective in making you aware of how much you spend. Of course your goal here is to spend less.
5. Compare your total spending to your budget
At the end of the month, conduct a self-check and self-analysis on how you are doing with your goal of spending wisely (or less). Do this by comparing your budget or limit to the actual spending you’ve made. See if you are able to follow your budget or not. Remember that if you weren’t able to meet your target, you can always try again the following month.
I hope you were able to pick up valuable lessons on personal finance and money management in this article. Any feedback or comment you will give is very much appreciated. Also, please feel free to share or refer this article link to your friends, family and significant one’s.
For a final note, take with you this important quote about spending and money:
“Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.” – Will Smith