What’s the fastest way to stop spending money? Reduce your debt.
I get this question all the time! Let me tell you, living on borrowed money is not sustainable. You know logically that spending money that you don’t have is playing with fire. Too much debt strains relationships, causes anxiety, and can even impact your ability to get a job. But the cycle is hard to break. The key is to stop spending money by reducing your debt burden. But it’s not always so easy…
The bigger we inflate our lifestyle, the more of a presence it becomes. Our identity is tied up in it. We may feel shame because we are struggling to maintain an image of success, and we don’t see a way out. Or our family doesn’t see a problem, which isolates us further.
We have to face our demons before we can make changes. If you are caught in a spending cycle, consider the stories you tell yourself that compel you to continue this behavior. What are you trying to prove, hide, or numb? What are the triggers for your spending?
Are others in your household complicit in your overspending, or are you fighting because one of you wants to change? Maybe you ignore your financial problems completely to avoid tension with your family. See if you can point to a time in your life when your identity and financial reality split ways.
My Spending Problem
I spent years distracting myself from my emotions by turning my attention to shopping. When my personal relationships were strained, I would buy a new car. Dealing with the salesman as a woman made me feel powerful. I felt important when I parked it in front of my house, and I loved being seen driving a flashy convertible. My self-worth was wrapped up in all the things I “owned”—of course, they were all financed.
When I was forced to pare down because my lifestyle was no longer sustainable, I realized how much my possessions were weighing me down. Spending money was an addiction. I find that many of my clients, like me, turn to habits for comfort that ultimately control them.
Consider the feeling of being liberated from owing anyone money. You may feel like you need your club memberships or boat to remain in your social circle. Your clients expect you to maintain a certain lifestyle. The truth is, most people don’t think beyond their own spending.
The Solution to Reducing Your Spending (How to Stop Spending Money)
What’s the solution, then? Well, it’s pretty simple actually! Concentrate on you.
Don’t concentrate on the image you project to the world when you hide behind your beautiful home or your job title. Instead, ask yourself… what makes you happy? It’s probably not “stuff,” or you would feel fulfilled by all the gadgets and toys. What gives your life meaning? While spending and expensive experiences are fun for a time, lasting confidence comes from proficiency at a skill, spending time with friends, faith, and pursuing goals that test your mental or physical limits and strength.
Once you recognize the void spending fills in your larger identity, consider what changes you can make to displace its power. Then, it’s time to do the hard work to get out of debt.
Besides, once you’re actually out of debt – it’s easier to justify purchasing some “stuff” once in a while!
Laying out the Cards
The starting place is to stop accumulating debt. The more debt you accumulate, the more you will spend. Therefore, reducing your debt burden will help you stop spending money faster. You will need to take a look at your spending in detail to understand how much is going in and out each month and how big your deficit is.
I talk about getting started with a budget here. You can start by examining what percentage of your monthly take-home income is going to your regular monthly bills—your home, your car payments, food, insurance, utilities.
Is it more than you thought? It’s easy to overspend if you are carrying a too-large mortgage or expensive leases without much room for extras at the end of the month. Address the big things first for the biggest impact. Be honest. Are you over-leveraged? A too-big mortgage can be suffocating, and while moving is a huge change, it has the potential to lower your insurance, utility, HOA, transportation, and other bills.
Remember that even if you are squeaking by, your credit score will consider your debt to income ratio, so you are getting dinged while you are struggling to pay your bills. And a low credit score will make it more expensive and harder to borrow if you need help. It’s a vicious cycle. Not to mention, retirement should always be on your mind. At some point, you will not have money coming in, and you need to prepare for that time.
Get your family on-board. If you share finances with someone, it’s time for a Come-to-Jesus moment about what changes need to happen. One person making changes while the rest of the household plows along business-as-usual is a recipe for disaster. It may help to enlist a third party so everyone can say their piece. Understand the reasons why this is important for your future stability. Collaborate on future goals. What is everyone motivated to save for? Get real about where the spending needs to change without pointing fingers.
Budgeting should lay out all the places your money is going. Do you have subscriptions that you no longer use (or that are no longer worth it in the interest of stopping the spending hemorrhage)? Cable, streaming services, gym memberships, monthly beauty boxes, magazines, swim lessons. Even though some of these don’t seem like much month-to-month, they add up.
Here’s another big one: Stop using shopping for entertainment. Do not window shop to fill your time. Meet your friends somewhere else. Someone fighting a gambling addiction does not spend all their vacation time in Vegas (if they are serious).
If you find a void, fill it with a new activity…yoga, gardening, volunteering. Taking on a new hobby has the added benefit of enlarging your sphere to include new people. Spending can be a self-centered activity to make us feel better, to impress others, to prove that my family can keep up with the neighbors. Branching out to include other interests and people will help you define yourself in new ways outside of your spending.
When you really want to buy something, establish a waiting period. For example, for any large purchases, wait 10 days. Take this time to comparison shop. Think about how it will fit into your budget, and I don’t mean how you will finance it. Unless you are going to live in it or it’s a necessary primary vehicle, you should not be taking on debt. If you are actively digging out of debt, this is not the time for large purchases anyway.
Many people find it easier to stop spending money if they cut up the plastic. It’s impossible to overspend when you have a predetermined amount of cash to get you through the month.
Consider each new purchase in terms of the number of hours you will have to work to pay for whatever the item is. If one of your long-term savings goals is for a trip, consider how much further it will delay your vacation to the islands.
If you eat out frequently, this is one area where you can pivot to stop the money bleed quickly. Plan your meals ahead for the week, and make a list for the grocery store. Cooking can be a rewarding and adventurous activity in itself, and you’ll probably eat better. If eating out is a big part of your social life, have friends over for dinner or meet for coffee instead. Bag your lunch and have something you can grab on the way out the door in the mornings instead of stopping at the drive through on your way into work.
When is spending money okay?
At this point in the article, you may be wondering… is it ever okay to spend money? Well, of course! We all have bills to pay, and there’s no shame in planning for certain discretionary expenses either. Plus, certain things like gym memberships can be a great investment in your health – which can in turn save you money down the road. Personally, I spend $200 for Orange Theory and it saves me thousands a year on stress eating and shopping. And my brain loves it!
The trick is making sure you’re sticking within an overall plan (i.e. budget) that keeps you on track long-term. Take eating out as an example. You don’t necessarily need to avoid all restaurants and live exclusively on ramen noodles. You just need to moderate your eating out within an established budget. Once you hit the budget for that month, you stop spending money and wait until next month to visit another restaurant again.
Here are just a few more examples of what I call “good spending” –
- Mental, Emotional, and Spiritual Health – Therapy, Yoga, Self Help Books, Meditation Apps
- Physical Fitness & Wellness – Gym Membership, Home Gym Equipment, Running Shoes, etc.
- Career and/or Business – Certifications, Education, Online Courses, New Degrees / Skills
- Personal Environment – Flowers, Paint, Photos, Artwork, Nice New Sheets!
- Social Life – Bicycling, Hiking, Kayaking, Golfing, Walking, Book Clubs, Dog Walking, etc.
These are just a few ideas, of course, and even some of these could be “overdone” if moderation isn’t maintained. But the point is simply that you can and should feel okay to spend money sometimes, especially in areas that will pay dividends in other areas of your life. What’s the point of working, after all, if we can’t enjoy the fruits of our labor?
Good vs. Bad Debt
Changing your spending habits is not (usually) an overnight fix. Just as it will take time to pay down money you owe to others, the urge to spend is a constant force. It’s not easy to stop spending money, after all! We live in a materialistic society, and everywhere you turn, the temptation is present. Your kids will need the newest shoes, your spouse will want to join that golf club with work friends, and you will want balayage.
A united front is so important, and there is no greater gift you can give to your kids than self-awareness about spending. Be honest about why living your life with someone else’s money is draining and the steps you are using to take back control of your money. Celebrate your progress—but not with spending.
It helps to join others who have the same goals and can share tips and wins along the way. The Money Circle is a great place to find like-minded individuals and families on that journey. The sooner you get real about your spending, the sooner you can formulate a plan for freedom from debt. I look forward to hearing what is working for you!