5 Micro-Habits To Stop Overspending
January 11, 2023
Are you the type of person who leaves the office for your lunch break and comes back with a new pair of shoes that you just couldn’t pass up? Do you sit down at your computer to do some harmless browsing, and the next thing you know, you've got a virtual shopping cart full of items waiting to be checked out? You are not alone.
Overspending, unfortunately, is a problem that affects many of us. A recent study, for example, shows that 40% of Americans have overspent to impress someone. Some of the top budget busters according to this study are clothes shoes and accessories. With the right approach, however, overspending is an issue that you can overcome. It all starts with incorporating a few micro-habits into your regular routine.
Micro-habits: What are They and How Do They Work?
If you’ve been an overspender most of your life, it’s unlikely that you’ll just wake up one day and find yourself not overspending anymore. That’s why you have to start small, more specifically with micro-habits. But what are micro-habits exactly?
Essentially, micro-habits are small actions or changes you can implement into your established routine. They are quick and almost effortless behaviors that you can perform consistently to make progress toward a larger goal. These small habits allow you to stack up small victories, which can, in turn, inspire you to undertake more and more ambitious changes.
For example, let’s say you want to become a more active person. A micro-habit that you incorporate into your current routine to get started with this goal is jogging for 15 minutes every day. As this micro-habit becomes part of your everyday routine, it can be lengthened out or made more difficult. For example, 15 minutes could easily turn into 1 hr as you get in the groove. With time, it could also encourage you to take up more fitness-related habits, such as going to the gym a couple of days a week.
Basically, a micro-habit can have a domino effect that leads to big results in various facets in your life whether it's your health, finances or personal growth.
Five Micro-Habits to Stop Overspending
Overspending, as we have already seen, is a common issue for many of us. The key to overcoming it is incorporating micro-habits into your routine or making small changes that add up over time. Here are some top micro-habits you can build into your routine to curb your spending impulses and become a more mindful spender in the long run.
1. Set a Spending Waiting Period
Create a mental pause button and press it before you buy anything that you don’t consider to be absolutely essential.
For example, if you are browsing the web and come across an item you feel you need or want, go ahead and add it to your online cart as usual. But, don’t check out right away. If you’re in a physical store, take a picture of the item and its price tag, but don't buy it right away.
Instead, wait for at least 24 hours to decide if you really want to make the purchase. For bigger purchases, like those that cost over $500, wait even longer, such as three days or even a week if possible. Oftentimes, the item that appeared cool and absolutely essential will appear less so after you’ve slept on it or spent some time thinking about it.
Of course, there are times when you may find yourself still desiring the item and wanting to buy it even after sleeping on it or cooling off for a few days. In that case, do some comparison shopping to see if you can get a better deal for it elsewhere.
If it’s an online item that you added to your cart but didn’t check out, see whether the retailer has sent you an "abandoned cart" email to remind you of your pending purchase. Many retailers will often include a discount code or coupon to entice you to complete the order, which could at least save you some money.
2. Institute Weekly No-Spend Days
Instituting no-spend days into your regular routine is another micro-habit that could help you break the habit of overspending over time.
During a no-spend day, you literally don’t use cash, debit cards, or credit cards for an entire day (unless there’s a dire emergency, of course).
Committing to no-spend days can help show you just how much you spend money and become more mindful going forward. It can also help you come up with more creative solutions to meet your needs rather than just using money. That could, for example, mean staying at home and streaming a movie instead of paying for a ticket to the theater.
To make the habit manageable, start small, like one no-spend day a week. You can turn it into a fun game whereby you keep track of your no-spend days per month and then try to beat the record month after month. Schedule your no-spend days on weekdays where possible; weekdays tend to have more structure, plus it’s generally easier to avoid temptation.
Succeeding with this strategy will require a bit of planning of course. This, for example, might include doing your grocery shopping and putting gas in your car the day before.
There are also things you can do on your no-spend day to increase your chances of following through. If you’re going out, for example, carry your driver’s license and leave the rest of your wallet at home for the day. Building no-spend days into your weekly routine can help you break poor spending habits and by doing so help you save money.
3. Spend Less Time on Social Media Every Day
Social media provides a way to stay connected with friends or network with people you may not otherwise see regularly. But social media can also influence your spending habits and cause you to spend more than you can afford. As many of us can attest, it’s easy to get swept up in all the images of people living their best lives with the latest and greatest products on social media.
In fact, one survey found that more than a third of Americans admit that their spending habits have been influenced by experiences and images shared by their peers on social media. They further admitted to spending more than they can afford to avoid missing out on the fun.
Another survey found that 40% of young adults have spent money on experiences rather than on necessities like paying bills – just so they could share them on social media.
Keep in mind also that companies literally spend tens of billions of dollars each year ($56 billion to be exact, according to Statista) on targeted social media ads designed to entice us to part with our money.
With this knowledge, it might pay to cut down the time you spend on social media every day. The more time you spend away from social media, the less the temptation and the less the influence and triggers to spend money.
You don’t have to quit cold turkey. Instead, make small micro-commitments or actions every day or every week as part of a larger process of gradually giving up the vice completely or significantly cutting down on how much you use it.
This can involve setting a daily limit for yourself—for example, allowing yourself up to a certain number of hours or minutes on social media each day. There are apps such as Offtime and Stay Focused to help you with that. Once you hit your limit, log off and do something else. To take it a step further, you can also set an entire day during the week as a "no social media day”.
Like with “no spend days”, keep a weekly record of your “no social media” days and try to beat it week after week. By reducing the time you spend on social media, you can reduce your exposure to some of the triggers that cause you to overspend. You may be surprised at how much easier it is to stick to your budget and not overspend when you're not constantly being tempted by all the latest trends.
Another practical way to reduce the negative impact of social media on your spending habits is to curate your feed, that is, to be intentional with who you follow. For example, if your goal is to stop overspending or become more financially disciplined in general, you could limit your following to accounts that provide tips and information or that encourage this behavior. Check out Happy Money’s Instagram for useful money tips every day to help you make progress towards your goals.
4. Start Paying For Things With Cash
Ditching plastic and paying for items with cash is another simple micro-habit that can actually help you stop overspending. Cash can cut your appetite for spending in two major ways.
First, you can only carry a finite amount of cash. So, if you buy everything using cash, your spending will be limited to the amount of money that you are carrying.
Secondly, when you pay with cash, you have a physical reminder of how much money you're spending. It’s much harder to let go of money or overspend when you're handing over bills from your own wallet than when you're just swiping a card, for example.
As you get into this habit of only paying with cash, track and then calculate the average amount of money you spend every day on essentials like transport or food, and then start carrying only that specific amount to further avoid spending temptations.
You can take this a step further with time by adopting a cash envelope system. Identify your problem spending categories, e.g., shopping, dining out, and entertainment, and assign a specific amount of money for each category. Use an envelope to hold the allocated cash for these categories. Once the funds in any envelope run out, don’t spend any more money on it. Start the following month afresh, and so on. By limiting your spending to the funds in your envelope, you will develop healthier spending habits over time.
If you are more digitally-inclined, a good alternative to using cash is a prepaid debit card. Prepaid cards work like debit cards, but you don’t need to have a bank account to have one.
The great thing about these cards is you can only spend the amount you have put on the card. That means that there’s no risk of overspending on unnecessary purchases, or overdrafts or racking up debt. Basically, you can use the card as a tool to stick to a budget. Before you sign a prepaid card, however, make sure to read the fine print so as to get a clear idea of all the fees associated with the card.
5. Keep a Money Journal
Take a few minutes at the end of every day to write down all of your transactions for the day. You can do that using a pen on a piece of paper and a notepad or a document on your computer or phone.
In addition to the amount you spent, include in your daily journal entry the reason for the transaction, that is, why you spent the money. Note the events leading up to the transaction, including what you were doing and how you were feeling. Finally, write down how you felt after spending the money. For example, were you happy with the purchase, or did you start to feel bad about it or regret it almost right away?
You’re probably wondering what the purpose of all this is. Well, keeping a money journal can help you make the connection between your thoughts, feelings, and spending habits. You may start to see patterns that you weren't aware of before. Perhaps you frequently spend money on unnecessary things when you're feeling stressed or bored. Or maybe you tend to splurge on unnecessary items when you're out with friends just to fit in.
Seeing these patterns or habits, including how much they might be costing you, laid out in front of you can help you make better spending choices in the future.
Mindfulness Makes All the Difference
Reining in your spending takes time and commitment. If you’re serious about becoming more financially disciplined and spending less, these five micro-habits are a great place to start. Pick a few and build them into your established routine and watch your relationship with money change for the better over time.