How to Stop Overspending

One of the things I hear over and over again as a financial coach is:

UGH I’M SPENDING SO MUCH MONEY ON USELESS CRAP!!!! How do I quit?!

If you want to live a healthy financial life, and that means a balanced one. You want to live within your means, and you want to be happy with the choices and purchases that you make.

So, how the hell do you do that? Well, the way I teach this is through the concept of Value-Based Spending.

What is value-based spending?

Value-based spending is the idea that everything that you pay for should add value to your life.

As we just talked about, spending money is NOT bad. But you should be spending on things that add VALUE to your life. And make sure when you’re deciding those purchases that you’re always looking at the bigger picture.

What does this mean?

So, what does that mean? This can mean two things, number one: Emotional Value. These are the things that make you happy and bring you joy.

But it can also mean this second part: Monetary Value or, getting the most bang for your buck!

The more something meets this criteria, the more valuable it is to you.

How do I follow this practice in my money life?

Monetary Value:

To make sure your purchases are adding monetary value, quantify everything. I know, that sounds like a lot of work, but bear with me here.

Once we pay for something, we forget about it. Things that we use everyday, we just automatically buy again for years. But have you ever actually gone through your life and tried to think about where you got those habits? If you start to see things in dollars, you start to realize all of the things you’re not actually getting the value you thought you did.

For example, I used to buy Bath & Body Works skincare. Didn’t we all? Originally, I started buying this because I was a teenager. I loved the all scents I could get and it was definitely in my price range with all of their deals and promotions. However, I recently did a major clean of my house.

I literally had 7 of these B&BW containers, FULL. Just lying around because I wasn’t using them. They are CRAP for my skin. They smell great yes, but they do nothing. They’re greasy, and I don’t actually LIKE how they feel!

I WANT to care about my skin, so I decided to go on a search for an alternative brand and found one I LOVE. Sol De Janeiro. On paper, this brand is waaay more expensive. But, each of those B&BW containers were around $10 each, and that’s assuming I got them on sale (which I probably did). Sol De Janeiro, is $60. In the past year and a half since I’ve done this, I’ve gone through 3 FULL containers. Even though it’s got a larger price tag, it is completely and totally worth it, because I’m no longer wasting money I’m actually using and enjoying the items I buy.

Now, this can go the other way too, if you have something super expensive you buy as part of your routine that you don’t really enjoy that much, find a cheaper alternative that you love instead. The point isn’t to judge it on it’s price tag, it’s to understand the value that item has on your life, and correlate it to it’s price tag so you can understand if it’s worth it to you.

Emotional Value:

To make sure your purchases are adding emotional value, keep an emotional spending journal. Even for a little while, keeping a spending journal can help you understand how you emotionally connect to your spending.

We THINK things are valuable when we buy them because we’re happy when we get them. That emotional release of pushing the ‘purchase button’ or the excitement of opening up your newly purchased items gives us a positive rush.

But try thinking about things you bought a month ago, are you still as happy with that purchase as the day you bought that thing?

If you start tracking not only the amount you spent, but how happy you were with that purchase, you can start to understand the emotional impact that purchases have on your life, and you’ll realize what brings value and what doesn’t.

Just remember, the task here isn’t to edit your choices to make them the cheapest ones possible, but rather make sure they’re adding as much VALUE to your life as possible.

Life Priorities:

Another layer to this, is to make sure that your purchases are lining up with your overall LIFE priorities.

If you love to travel, but you’re going out for lunch everyday instead and never have enough to actually go anywhere that’s going to make you really sad!

We tend to get really caught up in those tiny little purchases that give us that positive emotional response in the moment, but in the overall larger picture, usually they aren’t serving our needs.

So we need to make sure that all of our priorities are being taken care of. That when we’re making purchasing choices, we’re looking at the WHOLE picture of our financial life and not just our day-to-day priorities.

Figure out what those are for you. Take a look at what you money plan is, and make sure they align.

Once you have this clarity, it makes those smaller purchases way easier to combat. You’re not skipping that lunch date ‘because you think you should’ you’re doing it ‘because you’re saving to spend on travel instead.’

So, how are we all feeling about this? I know, you were expecting some gimmicky hack like, ‘put your credit card in the freezer and you won’t spend anything’, but, truly, THIS is what works. You have to get to the root of your overspending. It’s hard work, but that’s the only road to take for long-term success.

Let me know in the comments down below if you are going to try any of these out. Maybe you’ve already got a spending journal going? If so, what’s been the best and the worst purchase you’ve made in the last week?

Mine best has to be, the frozen popcorn shrimp that we’re having for dinner tonight, and my worst would be the Pepsi Lime I told myself I wasn’t going to buy but then did! - Hey, it’s hard for financial coaches too!