- Overspending is very common, even when you earn a lot of money
- I attributed all my large expenses to “moving costs” and reassured myself that my overspending would go down in a month or two. Boy, was I ever so wrong!
- 4 steps to stop overspending include being honest with yourself, starting small, tackling your big expenses, and planning ahead
When I moved to New York City, the big move took a huge bite out of my bank account and birthed my overspending habit.
It was summer and I had just graduated from college. Freshly minted with my undergraduate degree and a prestigious job on Wall Street, I was excited for the real world and a chance to finally live my New York dream.
This was the first time in my life that I was about to receive a constant paycheck. At the time, I, like most people, thought a decent paycheck meant the end of budgeting. Plus, I attributed all my large expenses to “moving costs” and reassured myself that my overspending would go down in a month or two. Boy, was I to be surprised in a few months!
Hey Big Spender
It felt like half of my graduating class moved to New York at the same time as me, which was great #nonewfriends.
But do you know what this also meant? A life of constant happy hours and weekends spent at the hippest places around Manhattan. A typical “grabbing drinks with a friend” would typically cost up to $90 (this was on average three cocktails $17 x 3 plus tip = approximately $60, including cab fare). Now imagine doing this twice a night every week.
But that was for just drinks, without any food. Dinners easily were over $100. Basically, on an average weekend, I would easily spend $250 on just going out. Multiply that by four, and I’d spend about $1000 a month on just “ambiance.”
Keep in mind that I still had other expenses such as food ($10 daily lunch and $50 weekly dinner). This was in addition to other fixed costs such as utilities (~$70), phone bill ($60) and other miscellaneous expenses.
My monthly rent already claimed half of my paycheck. So I was tasked with having the other cover all of my expenses and measly attempt to save.
As you can imagine, I didn’t save much. In fact, I found myself overspending every month. It got to the point where in order to avoid spending any money, I literally had to lock myself in my apartment and not answer any “come through” texts from friends. We all know hangouts are fun and all until the Venmo charges hit the next morning.
Aside from eating out, I also impulsively spent money on new clothes and cool gadgets. My excuse? It was a delayed “graduation gift” to myself, yeah right, I did this for six months. In fact, did you know that buying clothing is the number one reason people often overspend? 42% of respondents of a survey said they had blown their budgets while shopping online at some point in the last six months.
For example, every other month, I would buy a coat that was 50% off, but still cost $600. I convinced myself that it was a good purchase because it could have been $1,200. I made similar purchases like these for a few months.
Why People Overspend
According to this article, the top reasons people overspend is due to making purchases with a credit card or digital wallet, a lack of self-discipline, and ignorance about how much money is being spent.
Paying with a credit card, debit card or digital wallet, like Apple Pay, is convenient. However, that same added convenience can make it more challenging to monitor your spending habits.
Similarly, many people overspend because they have no concept of how much money passes through their wallet on a daily basis.
Nine Months Later, Still No Savings
Many months later, as much as I had a stable income, I still felt financially anxious. Every two weeks, I would wait for the notification that my direct deposit had hit my account.
Up until this point, I thought that earning more solves all your problems. Boy was I wrong. It wasn’t until I found myself nine months after starting to work, without any savings at all, that it became apparent to me how easy it is to fall in the trap of overspending and not having enough.
If you’re at this point, how do you move forward then? Well, this is what I did to end my overspending tendencies.
Step 1: Be Honest with Yourself
To be honest, the change was not easy, and everyday, it is still a bit of a struggle, a hurdle, a push. The first thing I did was to sit down with my finances. I printed out all my expenses for the previous month and went through each individual transaction.
I wrote next to each transaction whether it was necessary or not. Spoiler alert, there was no mistake with my bills, it was all me…
Step 2: Take Baby Steps
I started out small, I didn’t have lofty goals like save $500 a month or anything like that. No such thing. For the first three months, I told myself to just breakeven. This is, to not overspend any of my income.
At times, it can be so easy to get overwhelmed by a goal, whether it is to start saving, stop overspending or save for a house. That’s because we focus on the end goal as opposed to what we need to do to get there. So when you’re starting, just literally do the bare minimum. You’d be surprised at how all those bare minimums add up.
Step 3: Tackle the Biggest Expense
The next thing I did was I moved out of my pricey apartment. I won’t lie, it was a beautiful luxury building located in a great part of the city, convenient to everything. However, what I had learned over the year was that I worked so much that I was barely ever at home to justify all the money I was paying.
Plus, if I wanted to hang out with friends, we mostly just went out. Moving to a different part of the city allowed me to save $700 a month on rent. Sure, my new bedroom was much smaller than the other and I didn’t have a doorman to greet me every time I entered the building, but hey, you can’t beat $700 in savings!
Step 4: Plan Ahead
But I didn’t stop there, rent was the obvious money sucker, but there were other accomplices. Given that I was spending so much money on going out, I had to do something about that. Since I’m a social person, I still wanted to enjoy having a good time with friends and didn’t want to stop brunching.
In order to do that, I became better about planning ahead. I would offer to make all the reservations and pick the cheapest places in town (I mean, with decent food, of course).
I also would look at my calendar for the month and decide which brunches or dinners I wanted to go to.
Moral of the Story
In the end, I started to get more comfortable with my expenses and saved a bit more. I’d say that while it might be hard to follow all the steps outlined because we all have different expenses. Just attempt to do one, do the bare minimum. You’d be surprised at what a difference an extra $100 makes.