Sometimes it can feel like you’re doing all the “right” things, but you’re still sailing a little off course financially. You’ve prepared a great plan for consciously spending your hard-earned cash, you have strong and realistic goals, and on paper, everything looks fantastic. But, there are one or two areas where you consistently over-spend and wind up using your credit card or savings account to counter the over-spend, essentially robbing Peter to pay Paul and taking you further away from achieving your financial goals. If this sounds familiar, don’t fret - we can work on it! Let’s get down to business.
Managing your money effectively does require a keen eye on your expenses, and if you have identified your unique spending hot spots that need a little attention, you’ve got the first step nailed as many people tend to overspend without even realising it. So give yourself a little high five.
If you haven’t already, name and shame those hot spots! It could be a frequent overspend on eating out or takeaways, impulsive shopping, subscription services, groceries, or any other expense that tends to eat away at your budget. Take a moment to reflect on your spending habits and pinpoint these hot spots that may be sabotaging your financial progress.
Once you have identified your spending hot spots, it's crucial to establish a conscious spending allocation that is realistic. Make sure you’re allocating your money intentionally and in alignment with your financial goals, but also on a practical level, ensure that your allocation isn’t so tight that you’re setting yourself up for failure. By setting a realistic and clear boundary around your spending that actually fits with your lifestyle, you'll gain better control over your finances and reduce the risk of overspending.
Now it’s time to get tracking. Find a method that works best for you, such as using a budgeting or tracking app, a spreadsheet, or even just a notebook. The key is to make it easy to use. Regularly record and categorise your expenses in the area that you are analysing i.e. grocery spend, ensuring that every dollar is accounted for. This practice will provide you with a comprehensive view of your spending habits and help you identify core reasons why you may be overspending.
Once you have tracked your hot spot spend for a few weeks, it's time to analyse and address the overspending. Dive deeper into the data and identify the underlying causes of overspending. Is it emotional triggers, impulsive behaviour, or a lack of awareness? Are you overspending on food because you are buying takeaways every Friday? Identify the reason – is it because you are too tired to cook after a long week? Maybe buy takeaways every second Friday and keep a few frozen pizzas or other super easy food options tucked away for the alternate Friday. Likewise if buying your lunch has become a habit and it’s an expense that you’re not happy with. Get some inspiration online about great homemade lunches and make a few days' worth of lunches at a time. If you’re overspending on clothes because you feel like you don’t have anything to wear, maybe it’s time to completely overhaul and take stock of your wardrobe – use Pinterest to give you ideas for a capsule wardrobe for the season, or try Project 333 - wearing only 33 articles of clothing for the next 3 months. In my house, grocery shopping is an area that has the potential for overspending. I’ve identified that I’m fairly susceptible to impulse buying if I’m at the supermarket, so now I order my groceries online and try to limit adhoc supermarket visits.
Looking after these hot spot areas isn’t about denying you the things you love. I’m never going to tell you to stop spending money on things that bring you joy (and you can afford) – for some people, buying a really lovely barista-made coffee every day brings so much sunshine to their day. If it serves you, great. However, if you’re buying that coffee every day just because you’re running late every morning and don’t have time to make one at home, buy some nice coffee to keep at work. Identifying the CAUSE behind the overspend and creating practical, actionable strategies to address these issues is key to developing healthier conscious spending habits and setting yourself up for success.
Have a go at identifying your own hot spots, then track your spending in these areas to help you recognise and address any habits that may need a little tweak. With a little time and awareness, you'll get these areas under control, moving you one step closer towards a flourishing financial future.
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