It’s common knowledge that everyone needs to spend money throughout their life. Rent, mortgage payments, utilities, groceries and child care are just to name a few necessary expenses. But that’s not all we work and put our money towards. People also work to finance their personal hobbies, treat themselves to a nice dinner or buy something because they simply wanted to. While it’s most certainly encouraged to take care of yourself, you also need to be mindful of how much you’re spending. Overspending is a very common, yet harmful habit people pick up, which makes it all the more important to break it. Spending too much money can impact your entire life if you’re not careful. In this article, we’ll be going over ways you can stop overspending.
Think About the Debt You Owe
This may come off as a surprise, but debt can actually play a significant role in helping you save money. Everyone knows what debt is and how much financial damage it can cause if mishandled. It’s exactly this reason why you need to be diligent about how much you’re spending. Look at student loan debt for example. It’s one of the largest forms of debt you can ever have. But it’s also one of the trickiest to pay back, especially when combined with fluctuating interest rates. Fortunately, you do have a few options to help lower the amount you have to pay back. The most efficient way to do so is to look to a NaviRefi student loan refinance. Student loan refinancing is a process where you take whatever amount of debt you have and turn it into a new loan.
Take a Look at Your Bank Statements
Interestingly enough, those who overspend their money don’t even realize they’re doing it at first. It seems normal enough, at first. But when you go into your bank account to review everything, reality hits you hard when you see you’ve spent more than what you originally planned. What’s more is that the purchase takes time to spend in your account, so what you see at first might not be accurate. If you haven’t made a habit of routinely checking your bank statement, now’s the time to do so. It can help you keep better track of your spending, which makes organizing your funds much easier.
Budgeting is Your Best Friend
While we’re subject of organizing finances, budgeting is going to be help you out immensely. Creating a budget isn’t as difficult as some people make it out to be. It’s just where you write down every expense you have to get a better understanding of how much you can save each month. The only real reason why people consider it difficult is how time consuming it can be sometimes. But once you have the initial budget settled, the process becomes far simpler as you already have a general idea of what you’re spending. It’s a general rule of thumb to write down the necessities first and then list what you purchase for leisure. Anything you don’t need should be cut out of your budget.
Even if you earn extra money in your spare time, you still need a budget for all income and expenses. A great way to structure your budget is the 50/30/20 method. This is where you put half your monthly income to the important expenses, spend 30 percent on what you want and put the remaining 20 percent into savings. There’s actually a stricter variation called the 70/20/10 method. This is more or less the same as the other one, except the remaining 10 percent is used for your debt payments.