One thing we can all agree on is that the cost of goods has dramatically increased, and it’s taking more of our profit regardless of how much money we have.
When inflation goes up and the supply chain falters, we’re going to pay more money for essentials, including groceries, gas, food for your animals, etc.
Transcript: Wealth Inside and Out® Podcast – How to Stop Spending So Much Money
Hi, my name is Annette Bau (bah oo), your host of the Wealth Inside and Out® Podcast. I’m a Certified Financial Planner™ and founder of The Millionaire Insider®.
For over 30 years, I have been advising and researching the top 1% of Millionaires.
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Recently I’ve heard the question of how to stop spending so much money, so I thought it would be appropriate to do an episode.
In this episode, you will learn:
- How to stop spending money
- Tips for saving money
- How to avoid impulse buys and spending triggers
- Ways to improve spending habits so you can achieve your financial goals.
Let’s dive in.
How to Stop Spending So Much Money
1. Spending Habits
The first step is to understand your spending habits. Where do you overspend, and more importantly, why do you overspend?
Once you can start recognizing patterns you have in your spending behavior, it’s going to give you a lot of clues. Sometimes things are missing in our lives.
Maybe you want a relationship, or you are stressed out because you don’t weigh your ideal weight. What ends up happening is we feel down or depressed or upset or like we’ll never find the right person, or we’ll never weigh our ideal weight. And what do we do? We spend.
So we just got to be aware of it. And it’s not to judge ourselves. It’s not to blame ourselves.
It’s for awareness so that we can figure out what we need to do to make the changes that are going to allow us to not only enjoy our life now but, more importantly, be okay in the future.
If you need help creating a spending plan that will help you enjoy life now and save for the future, click here:
One thing that helps do this is to get comfortable with the uncomfortable. It’s kind of interesting that when you get into your 40s, you start realizing that you can’t eat anything you want.
I’ve always been able to eat pretty much anything I wanted. Starting in your 40s, and you’re like, maybe not. And then in your 50s and you’re like, clearly not.
I have worked on health, specifically getting my blood sugar under control. In the process, I’ve focused on paying attention to when I’m truly hungry versus just eating because I feel like eating. It has been powerful.
I weigh my dream weight that I have not weighed in probably 15 or 20 years.
Now, it was never like I was overweight. I was always within a five-pound range.
It’s just awesome to feel in control of my brain regarding food. When I eat, I am hungry, and I’m not eating just to eat. And whether you eat just to eat or you spend just to spend, it’s the same underlying issue, right?
Something’s missing; something is not right. And I think one of the things that I found helpful is to just get comfortable being uncomfortable, being okay, that between three and five o’clock, I get hungry.
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My eating protocol is that I eat between 5 and 6 PM. Then I don’t eat again until about 9:30 or 10 AM the next morning. I have been intermittent fasting for a long time, and it was working well.
I started researching and listening to this expert who ironically enough, is a life coach. She knows a lot about blood sugar and insulin. She recommended that you don’t eat from the time you fast, which for me would be 10:30 in the morning until dinner, which is at five. It was really hard for me.
Between 2 and 5 PM, I’m hungry. And my brain was hard-wired to eat. It was almost like if I didn’t eat, I might starve to death.
I’m not sure what I was thinking. I was so hardwired to eat before dinner.
Eating something versus sitting in the space of being hungry. She recommends that you don’t go drink water or do anything to avoid the feeling you are experiencing. That has been so powerful.
Thankfully my issue has never been overspending.
Whether the issue is overeating, overspending, sex, gambling, or whatever issue you have, it still comes from the same source. So I encourage you to just try getting comfortable, being uncomfortable, and you’ll see that you’re going to live.
I realized that I was not going to die. I’m not going to float away because I didn’t eat for 2 hours. That said, it was hard until I trained my brain!
Some practical strategies include tracking your expenses, really being clear on your spending plan, looking at how you budget your money, and that you have a clear plan and that you are consistent with what you do.
These strategies are going to help when it comes to not overspending.
Let’s start by identifying what spending habits you may need to address because we all have different ones, and being aware of what yours are is going to help you.
1. Impulse Purchases
Do you have problems with impulse purchases? Meaning you see something and you have to buy it?
2. Shopping Online
Or, possibly you have an issue with shopping online.
3. Credit Card Purchases
Or perhaps you lack discipline with credit card purchases. It’s so much easier for many of us to use a credit card than it is to pay cash.
4. Grocery Store Spending
What about grocery store spending? I share a story that I went to the grocery store just to do an experiment for my membership.
I had $200. When I got up to the checkout counter, the checkout clerk said, “Are you okay? You look so stressed out.”
I replied, “I have never felt so stressed out in my life.” I was even weighing the tomatoes. I’m good at certain things, knowing how much it costs, but not when it comes to the cost of produce.
It was so stressful. I remember weighing everything and ended up spending $ 198 of the $200 cash I had.
When you have a credit card, it’s easier to overspend, right? And if you know anything about me, I don’t do our grocery shopping because I’m really bad. You need someone who can create a grocery budget and stick to it.
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I go to my favorite health food store about every two weeks. My husband gets to go, but I always give him three strikes.
If he says, “Do you really need that?” Or, “You are spending too much money!” I respond that he can go sit in the car. It’s our joke and we laugh. But he wants to go with me. And I buy the things I want to buy. And I buy the things that I need.
He’s more disciplined and is better at buying what’s on the list.
I don’t like to just buy one. If I need macadamia nuts, I’m going to always buy two because I don’t want to have just one and then be without them. So, we have a little different philosophy on the quantity of items to purchase.
That said, whoever is doing your grocery store shopping needs to have that discipline. It would not be me. I’m not good at that.
And then I go to the grocery store when I’m hungry, which is also terrible.
5. Shopping Without a Shopping List
Another issue is shopping without a shopping list. That is disastrous.
6. Spending Money Earmarked for Savings on “Want-Based” Expenses
These are the things you want to buy, but not that you need.
7. Not tracking your spending
8. Spending more money than you earn.
9. Paying for a Membership or Service You Don’t Use
Possibly a gym membership or some other type of membership that you’re not using or you can’t afford.
The next idea isn’t a way to stop spending money, but it is a way to increase your income, which is equally important.
10. Set Up a High-Interest Bank Account
And then what about even setting up a high-interest bank account? You must check on the guarantees, but that’s another way in which you can make more money.
You’ve got to check it because there is a lot of conflicting information, and not all accounts are guaranteed.
11. Make Better Spending Choices
It can also help you to make different choices when it comes to the amount of money you’re spending. Another thing you may need to do that’s a little off track from this.
Ideally, your emergency reserve is in an account that’s guaranteed.
2. Create a Solid Financial Foundation
The next step is to create a solid foundation. The first thing you want to do is set financial goals. They should include short-term and long-term objectives.
When you have a plan, and you’re clear on your desired destination, it’s so much easier to stay on course and achieve your goals. Because you’re focused on what you want and how you’re going to feel when you get there versus how you’re feeling right now in the moment.
Create a Plan to Save Money
Another insight to stop overspending is to create a plan to start saving money. I began saving $25 a month when I had no extra money, and that simple habit has made all the difference in my life.
And, because I had the discipline to save that little amount of money when I had none, it gave me the foundation to go on, to not only save a lot more money but accumulate the wealth I desired. And even now, having reached my financial goal, which is a crazy goal, it wasn’t even really a goal. It was more like a goal I set because I never thought I could reach it.
When I hit it, nothing changed. We still watch what we spend, and the funny thing about it is our kids can’t understand it.
It’s like you have all this money. I’m like, first of all, you don’t know exactly how much money you have. But it’s just so interesting how when you have smart kids, there are advantages and disadvantages.
Understand the Big Picture
My son says, “Well, let’s just calculate the real estate you own.” I respond, “Let’s calculate the amount of insurance and taxes we pay each year.”
People often don’t see the big picture. Just because you have a high net worth does not mean you still don’t watch your money. And everyone, regardless of how much money they have, has a finite amount. So you just got to be aware of that.
But what we focus on is going to expand. Focusing on saving money is going to be a better option than focusing on spending it. So just be aware of that.
3. Eliminate Unnecessary Expenses
The key to learning how to stop spending so much money is to create a budget or a spending plan that you stick with. Now, if it seems overwhelming or you start feeling anxious, just commit to 30 days.
It doesn’t have to be forever. Just commit to 30 days. Once you start to see results, it’s amazing what happens.
It takes about 18 to 254 days to change a habit. On average, 66 days. So once you do it for 30 days, then you’ve got another 30, and you’re going to be so much further ahead than you could ever imagine.
Be easy on yourself and just start with a short-term commitment.
Determine Your “Need Based” Expenses
One of the first steps is to master your personal finances, and that requires that you know what your monthly expenses are. Specifically, “need expenses.” Examples include:
- Savings for your emergency fund
- Retirement funding
- Rent or mortgage payments
- And credit card or debt payments, if you have any.
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Deposit All Income Into a Savings Account
Next, you want to deposit all income into a savings account. Then once or twice a month, you’re going to transfer your “need-based expenses” to your checking account. At the end of the month, you’re going to determine how much you have left.
Then, you can determine how much money you have to spend on “want expenses” and how much money of that you’re going to save. Now, if you have trouble determining how much you need to save to ensure you’re going to secure your retirement, I recommend you hire a financial planner or qualified money coach. It will be money that’s well spent.
4. Reduce Your Food Bill
One of the best and easiest ways to stop overspending is to better manage your food bill. A great first step is to reduce your grocery bill.
1. Create a meal plan
Make one meal and then freeze two meals for the future. That’s what we do. We’ll make a big meal, and we eat one, and then we freeze one or two for future meals.
If our boys are eating with us, that doesn’t always work, but if they’re not, it does.
2. Create a shopping list
Always create and use a shopping list before you go shopping for anything, including food, and then only buy what’s on that list.
3. Budget for groceries
Now, as far as grocery budgeting, there are a lot of people who give a lot of tips on cost-effective meal planning, and that’s an easy way to avoid overspending. By cooking your meals, you can save a lot of money. So I encourage you to consider that.
4. Dining Out Tips
And then some tips for dining out. You want to balance your social life and dining out without breaking the bank.
Share a meal. One of the advantages of sharing a meal is, number one, you don’t overeat, so it helps with your weight.
And number two, you save money. The other thing you can do is you can eat before you go out. I know people who eat before they go out, or they will just order an appetizer or something small.
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Know the Price Before You Order
And know the price before you order something. And I’m going to give you an example that is so frustrating to me.
We took my son out for his birthday, and it was an expensive restaurant. I mean, the bill was hundreds of dollars, and I decided to have a glass of wine. The server brought out two samples, and they were both okay.
I thought all right, yeah, I can live with this one. So I ordered a glass, and I ended up ordering a second glass.
It was $37 a glass. I paid $74 for that wine.
I was just floored. First of all, I thought that it was inappropriate that he did not tell me how much it was. And secondly, it wasn’t that good. So pay attention to what you are ordering and how much it costs.
I was talking to some of my other wealthy friends, and every single one agreed they would have been livid.
And they said, yeah, I always want to know the price before I order because a lot of times they want your bill to be higher because then they make more money. So for whatever reason it was, he didn’t let me know that, and I was a little frustrated.
5. Get on The Same Page as Your Partner
A critical insight is to get on the same page as your partner. If you have challenges in the financial area with your partner, I encourage you to create agreements about money with them, ideally before you get married. The agreement may include how much money you each can spend on “want expenses” or you jointly can.
Create an Agreement with Your Partner
What amount of money do you agree to consult with your partner before spending?
If my husband or I make a big purchase, we just discuss it with each other. It could even be a purchase of something that’s like $200, which some people may not think is a lot. That said, if we’re going to spend money on something, we almost always talk with each other.
I think that having open communication and getting a second opinion is always a good idea. It will also help you to avoid impulse spending, and it generally helps your relationship.
A lot of relationships end because one partner is a spendthrift. Now, if you are married to a spendthrift, and it’s impacting your financial future, you may need to explore legal solutions to protect your finances and your credit score. Sometimes when you have partners that overspend, you don’t even know it.
Read and Review Before You Sign
But some of the things you can do is make sure you always pay attention to what you’re signing for and that you are not allowing that partner to take out credit cards or loans with you as a co-signer. In one situation, the partner who was a spendthrift was using the debit card on their joint account to take out cash. The partner did not know where this cash was going, but it was wreaking havoc on their finances.
So the partner that was not the spendthrift set up a separate account. This resolved the worry and anxiety of not knowing if there was enough money in the account to pay bills.
If you’re in a community property state, you may need to get legal counsel. That said, don’t sign anything that puts you on the hook for credit cards, loans, et cetera that can cause problems.
6. How to Stop Spending So Much Money With the 3-Day Rule
The three-day rule is designed to help you delay gratification if you or your partner is driven by impulse buys. You know that dopamine, those pleasure hits. The three-day rule is priceless.
You can go to https://themillionaireinsider.com/8 if you want to learn more about dopamine. But while it often feels good at the moment to buy something, long term, it can wreak financial disaster.
Apply How to Stop Spending So Much Money With the 3-Day Rule as follows:
If you see something in a store or while shopping online, do not purchase it. You wait three days and confirm number one, you can afford it and that you need it. If you don’t need it and you really want it and can afford it, then you purchase it.
This practice has helped thousands of people better manage their money. If you notice you impulse buy either from your social media feed or when you’re online, commit to applying the three-day rule and removing your credit card from your iPhone or your computer. That is going to help immensely.
So there you have it.
Recap – How to Stop Spending so Much Money
- 1. Understand your spending habits and determine what triggers you.
- 2. Create a solid financial foundation.
- 3. Eliminate unnecessary expenses.
- 4. Reduce your grocery bill and create a meal plan.
- 5. Get on the same page financially with your partner.
- 6. Apply the How to Stop Spending So Much Money with the 3-Day Rule.
Until our next episode, take one action that will help you create a secure financial future and retirement you love.
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Thank you so much for joining me for
How to Stop Spending So Much Money.
I’m Annette Bau (Bah oo).
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