How to Control Your Spending in 7 Simple Steps

Finance Advice | 17 May, 2024

Life costs money. That is a simple fact. But as the cost-of-living crisis pulls on our purse-strings, many of us know we should be setting limits on how much we spend.

Many Australians are already trying. Commbank iQ’s Cost of Living Insights Report released in November last year showed that essential spending rose by 3.5% per capita – these are things like food and rent.

On the other hand, discretionary spending – those little extras – fell by 0.2% in July–September 2023, compared to the same period the year before. This shows that many Australians are doing their best to tighten their purse strings in order to meet the increasing costs of essentials.

But for many of us, the habit of spending can be a hard one to break. It may even rise to the level of an addiction. There are many reasons why people overspend, such as instant gratification and the feeling of control. And yet we know for the sake of our finances, we need to stop.

Overspending can lead to significant personal debts and of course high repayments. This can affect your ability to buy a house or take out other loans down the track. Not to mention the feelings of regret and guilt that often follow.

If you’ve been asking yourself, ‘How can I control my spending?’ we have some answers. Here are seven steps you can take when you feel that your spending is out of control.

How to control my spending

1. Prepare a strict budget

When considering how to control your spending, a budget will be one of your first courses of action. If you are a habitual over-spender, it is likely you will find this hard to follow at first. Seeking support from a family member or trusted friend can help here. They could offer weekly budget check-ins or provide emotional support when you are feeling tempted to spend.

You will find many ideas online to help you stick to your budget. For example, cook more at home instead of eating out. Opt for beach days or hikes with friends instead of drinks or clothes shopping. And make sure that you’re prepared for the holiday shopping season.

Once you begin brainstorming, you will find there are many low-cost or free alternatives out there.

2. Take your credit cards out of play

Having credit cards in the wallet can prove too tempting for some. A simple way to avoid the temptation is to cut them out completely. Or if you feel you need them for emergencies, store them away in a safe place at home rather than keeping them in your wallet (or your digital wallet!).

By taking your credit cards out of play, you will find it harder to rack up more debt.

And if you have multiple credit cards, consolidate your debts into one account with the lowest interest. This will allow you to streamline your repayments.

3. Set up an online saver

A fantastic strategy when wondering how to control your spending is to set up a direct debit into a separate account. Ideally, this will be an online saver account – one that does not have a debit card and is with a different bank to your salary account.

You can then set up an automatic transfer of any surplus money from your wage directly into this account. If possible, you could even ask your employer to transfer your discipline savings funds directly into your online saver account.

4. Pay down your debts

If you have been an over spender for a while, you may have accrued some personal debts. Of course besides overspending, we also want to pay these off as soon as we can. Following on from step 3, you can now use the funds in your online saver to reduce your personal credit.

5. Learn from the experts

There are many experts to learn from. One book we highly recommend is Scott Pape’s first book, The Barefoot investor. This book gives a fantastic process for becoming more financially stable. It also discusses the concept of the online saver account, referred to by Scott as a ‘fire extinguisher account’.

6. Communicate with your credit providers

When you recognise that your spending is out of control, and therefore your debt, schedule a meeting with your creditor providers to talk about your options. Together you can generally come up with a plan for repayment. Again, debt consolidation may also be a good option.

7. Know when to make the call

Finally, if the situation is insurmountable and your personal debts are unable to be repaid, you may need to take the next step. It may be time seek the assistance of a pre-insolvency professional. They can offer you professional advice to help you during this challenging time.

Need support?

Trying to learn how to control your spending? You’re not alone… we can help!

The team at Stapleton Finance can assist you to understand your finances better and work towards a better position. We can help with debt consolidation and provide advice so your personal credit doesn’t have a long-term impact on your finances. Get in touch today.

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