How to Change Your Spending Habits

Picture this: You’re at your favorite clothing store, and you spot a deal you just can’t pass up. No, you don’t technically need that fun sweatshirt with the cute graphic on the front, but you are powerless not to buy it, since it’s going for 30% off. 

Overspending is incredibly common—it happens to the best of us. Don’t beat yourself up over it.

If you’ve got a problem with overspending, don’t lose hope. Tackling it can go a long way toward accomplishing financial goals like paying off debt and saving an emergency fund. If it’s extreme, overspending could leave you needing to explore debt relief programs. 

It’s worth learning the signs that you need to change your spending habits and take charge of your financial future. Here are a few ways to tell you might be overspending, along with some tips for changing your spending habits for good. 

Signs You Need to Change Your Spending Habits 

Here's what to watch out for. 

You're spending too much on small stuff

One easy way to know if you need to change your spending habits is to ask yourself, “Where does my money go each month?” If you don't know the answer, you may be spending too much on small stuff.

You probably don't notice all the small purchases you make over time. However, these purchases can add up quickly and leave you with less money for important financial goals. If you cut spending on these little purchases, that could have a major positive impact on your finances.

Auditing your spending is a great way to reduce the little expenses and change your spending habits for good. To do that:

• Take a close look at your bank account and credit card statements.

• Create a spreadsheet, or grab a notebook and start writing down your expenses. Organize them into categories, such as “groceries,” “dining out,” or “online orders.”

• Identify the purchases you're spending the most money on. This might be clothing, restaurant food, or hobby supplies. 

• Set spending limits on each category, especially those where you regularly spend too much. 

Once you've done this, if you really want to change your spending habits, you need to regularly track your spending. Weekly spending check-ins could help you become more mindful of overspending and focus your money on essential expenses.

You don't have a financial routine

If you don't have systems for managing money, chances are much higher that you'll overspend. 

Creating a budget routine is a great way to change your spending habits. At the end of each month, look back at the income you brought in and how much you spent. This allows you to forecast your spending for the upcoming month. You could also do this weekly or every other week if you need more help limiting spending. 

In addition to establishing a budgeting routine, start regular financial conversations with your significant other (if you have one and they’re part of your financial landscape). Talking about money more often could reduce the likelihood you'll fight about the topic. It also gives you an accountability buddy to help you stick to spending limits. 

Your credit card debt is creeping up

If your credit card balances don’t come down over time, or worse, they rise, that’s a sign you’re living above your means. It’s unsustainable. At some point, you’re likely to lose the ability to charge more. Thanks to high interest, it’s also a very expensive way to fund a lifestyle.

Reducing spending can be hard for anyone. We all like to buy what we want. Even so, imagine how much extra money you could have in your budget if you weren’t paying interest on credit card debt—possibly even enough to afford to pay cash for things you’re charging.

If you’re relying on your credit cards because of a financial hardship such as a job loss, that’s understandable. Using credit could be a good way to bridge a short-term financial gap. But if your credit card debt is lingering because of your spending habits, that’s something to consider. You’re hurting yourself by not letting yourself get ahead financially.

People just like you are seeking debt relief in Virginia and across the country. The first step is the most important one—explore your options.

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Common Spending Triggers to Watch For

Can you spot your spending triggers among these common ones? 

Emotional spending

There’s a reason the term “retail therapy” exists—sometimes, when you’re feeling blue, it’s easy to click “add to cart” online or add an item to your physical shopping cart and enjoy the little dopamine hit. But this isn’t a productive way to deal with negative feelings. 

Social pressure

Keeping up with the Joneses can be a short trip to more debt than you can handle. But it’s easy to feel that little twinge of envy when your friend turns up to lunch with the latest and greatest iPhone. It can be hard to separate your sense of self-worth from what you own. 

Convenience purchases and one-click shopping

The internet has made overspending so easy—you can do it right from your phone, while you’re anywhere in the world. Don’t feel bad if you’ve fallen into this trap—it happens to all of us.  

Impulse buys from targeted marketing 

Social media has made unwitting customers of us all. Remember, if a service (like Instagram) is free to use, you’re the product. Advertisers can get their hooks into you as the algorithm suggests products that seem tailor-made for you—and you spend as a result. 

How Can You Change Your Spending Habits?

Now you know how to determine whether you need to change your spending habits. But how can you put changes in place and stick with them? Taking these steps can make it easier to break bad habits and spend less. 

Create small wins

Starting with big goals can feel overwhelming, and a simple setback could cause you to give up. You're much more likely to succeed if you break big goals down into small ones that are manageable and measurable, and that you can achieve quickly. 

For example, you might be tempted to do a spending freeze and completely stop spending money on non-essential things—but this isn't a lifestyle most people want to stick with. Instead, try starting small, and celebrating the progress you make.

For example, if you love making coffee shop runs, switch to making your own coffee just once per week to start changing the habit. Replacing even one day of buying coffee with making your own brew adds up over time, and as you see how much you save, you may be inspired to make coffee at home even more often. 

Coffee might not be your thing. Look at your spending and try to spot little luxuries that you would be willing to live without. Remember that your sacrifices don’t have to be permanent. 

Visualize progress

Visualizing your progress is another great way to change your spending habits. 

For example, if you want to spend less at the grocery store, track your spending there. Your tracker can be as simple as a sheet of paper you keep on your refrigerator door. Record the date, grocery store, and the amount spent each time you get back from buying groceries.

With the tracker showing you exactly how much you’ve spent, you can spot improvements in real time, and might be inspired to look for more ways to save. You may even decide to get creative with the food you already have on hand to come up with quick meals that stretch your budget further.

You can implement this strategy with any spending cuts you want. Suppose you're prone to picking up takeout dinners. Record on a sheet of paper every time you go, where you went, and how much you spent. Keep the sheet of paper where you can see it, like in your car console. The visual reminder could be just the thing you need to skip the drive-thru once or twice this week.

Focus your energy on one thing, not many things

There are many moving parts to your financial life, and you may want to tackle multiple goals. However, when you try to address too many things at the same time, it’s harder to make progress.

If you want to change your spending habits, focus your energy on accomplishing that goal before shifting to a different one, like exploring your debt consolidation options or learning about investment opportunities. Once you've changed your spending habits, it should be easier to tackle the next goal. 

Use cash or debit instead of credit cards

Credit cards seem like free money, and that can lead to trouble if you’re not careful. In fact, research from MIT Sloan School of Management found that credit cards act as a trigger for people to “step on the gas” and spend more, putting the cost of what they were buying out of their minds. 

If you’re working on changing your spending habits, make your life easier by swearing off them for a while. Instead, lean on cash or a trusty debit card. This habit helps you avoid additional debt and reconnect with the money coming into your household every month—rather than whatever credit limit a bank extends to you. 

Build a budget that works

When you create a budget, you build the guardrails to save money—and also to spend. If you’ve never budgeted before, it’s worth exploring your options. Modern technology has given us budgeting apps that can make the process more fun. If you’re wondering where all your money goes month after month, a zero-based budget might be the right fit for you. This method gives every dollar a job. 

Or if you’re trying to lower your spending in some areas and increase it in others (such as lowering your takeout meal spending and boosting how much you send to your emergency fund), consider the envelope budgeting method. You don’t have to use actual envelopes for this, but you can if you want. You can also just decide how much you want to spend for each category every month, and write down what you spend as you spend it. Once you’re out of money for a given expense that month, don’t spend more on it. 

Remove cards from online shopping sites and apps to make impulse purchases harder

Credit cards make overspending easier, so even if you don’t swear off using them entirely, you can at least make it harder to fall into a spending trap with them. Log into your online shopping accounts on your phone and computer and delete the saved credit card information. 

If you have to get up to get your wallet every time you buy something online, that might just be the pause you need not to spend. At the very least, you could add the item to your cart and sleep on it, to see if you still want it the next day. 

Identify your spending triggers

Take some time to reflect on when you personally struggle with spending. Maybe it’s when you hang out with certain friends who have a lot of self-worth tied up in what they buy. If these people make you feel bad for your thrifty ways, don’t fall into the trap of spending due to social pressure. Re-evaluate those friendships and find people who are on your wavelength.

Or maybe you find yourself scrolling Amazon when you feel isolated. Instead, consider journaling or doing something productive and good for you that’s free. How about a nice walk around the neighborhood, or diving into an art project? Or even combing through your closet to find clothes you forgot you owned and might enjoy wearing again (or selling for cash to pay down debt)?

The 21-Day Spending Challenge

If you need a hard reset to change your spending habits, why not challenge yourself to a 21-day no-buy period? Over the 21 days, you take a break from spending on non-essential expenses like dining out, online shopping, or impulse buys that you encounter on social media or at your favorite stores. You can keep paying your bills and buying the stuff you need, like groceries. But no restaurant meals, gifts, or other purchases that aren’t truly essential.

Benefits of resetting spending habits

Building a new habit is hard, but incredibly satisfying. Trying a no-spend challenge can show you what’s possible. You could surprise yourself with willpower you didn’t know you had. Maybe you’ll discover that by cutting back on your hobby spending and using more of what you already own, you can funnel an extra $75 a month to your emergency fund. 

Tips for success during the challenge

Decide what is a need versus what is a want, so you know what you can’t spend on. If you’re cutting yourself off from takeout meals for three weeks, decide in advance what you want to eat instead (and ensure your fridge and pantry are stocked with all the necessary ingredients). Come up with some ideas for free entertainment, like programs at your local library or a hike on a nice day. You might also want to share your plans for a friend, as they can cheer you on and serve as your accountability partner. 

How to evaluate what to keep or change after the challenge

Once the 21 days are over, dig into your finances to see how much money you saved. Among the wants you weren’t spending on, decide which ones you can safely cut out of your budget going forward (or at least cut back on). Celebrate your successes. Maybe you realized that researching new recipes for weeknight dinners is fun, and you won’t miss your twice-weekly takeout habit if it becomes a once-every-other-week habit in the future.

Start Changing Your Spending Habits Today 

Deciding to change your spending habits is a worthy goal. It can set you on the path to many other financial successes. So get started today. 

Take a close look at your budget. Look for spending cuts you can make, and track your progress. Once you're spending less, you can use money you've freed up to work on other goals that matter to you.