How to Stop Spending So Much Money

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Spenders, you are my people! You know I’m a spender at heart. But the truth is, if you want to pay off debt quickly or save more money, you need to learn to control your spending. So in this episode of The Rachel Cruze Show, I’m talking about why we spend money and when we shouldn’t.

 

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Show Notes

Spenders, you are my people! You know I’m a spender at heart. But the truth is, if you want to pay off debt quickly or save more money, you need to learn to control your spending. So in this episode of The Rachel Cruze Show, I’m talking about why we spend money and when we shouldn’t.

Why Do We Spend Money?

Because it’s necessary!

There are some things we just can’t get by without, right? Like water, food, those gorgeous suede boots at Target —okay, maybe we can get by without those.

But really, there are four things in life that are unavoidable expenses. I refer to these things as the Four Walls. The Four Walls are the basic necessities you and your family need to survive! So when you’re working on your budget, your money needs to go to the Four Walls before anything else.

Four Things You Need to Spend Money On:

  1. Food
  2. Utilities
  3. Shelter
  4. Transportation

Now, if you’re out of debt and have a fully funded emergency fund, you can spend money on all the fun things without a worry! But until then, let’s talk about how to use money wisely so you can stick to your budget.

Causes of Overspending

We think spending money will make us happy.

In addition to the Four Walls, there are some other reasons we spend money. And this is where we can get into trouble. Sometimes—and I know I’m not alone in this—we spend money because we think it will make us happy.

Psychology Today explains: “Shopping allows people to visualize themselves in a ‘better’ life, where they’re dressed in nice clothes or surrounded by nice things. Buying makes these visualizations a reality.”(1)

You guys! Don’t fall into that trap! The old saying “money can’t buy happiness” rings truer now more than ever. Sure, money can buy fun, but it won’t buy you a better life.

Swiping a card makes overspending easy.

In Dollars and Sense: How We Misthink Money and How to Spend Smarter, authors Ariely and Kreisler explore why credit cards make it easier to spend. They found that credit cards allow the pleasure of shopping while separating the pain of spending. So when you’d normally feel uncomfortable spending money—when your brain goes, Eek, I don’t want to spend this hard-earned cash­—using a credit card takes those bad feelings out of the equation. It makes us feel okay about it. But while it makes us feel better, it doesn’t actually make our reality better.

This is why I teach about the benefits of using cash and the envelope system, especially for those budget categories where you’re tempted to overspend. And of course, if you must swipe a card, make sure it’s a debit card connected to your checking account—not a credit card. A credit card is just spending someone else’s money, and it’s debt. I never want you to tie up your future by piling up debt.

Sometimes spending money makes you feel like you’re saving.

Say what? Hang with me here.

Maybe you’re already attacking your debt. Maybe you’ve learned your lesson, cut up your credit cards, and you’re even on a budget! You may not be debt-free yet, but you’re working on it, and you feel good about the plan you have in place.

But the temptation to spend is always there, and there’s one type of spending that can trick you into thinking you’re saving.

It’s a gimmick that gets me every time, and I bet it has tripped you up too. In this episode, I’ll tell you all about it!

Reasons to Stop Overspending

Buying stuff doesn’t make you happier.

Like I said before—money can buy fun, but it doesn’t buy happiness. Don’t believe the lie our culture tells us through commercials, advertisements and magazine covers that if you spend more money, you’ll be living your best life. It’s just not reality!

You’ll actually be happier if you can save your money rather than spend it.

A survey conducted by Ally Bank found that 84% of savers attribute their happiness to a healthy emergency fund more than they do other factors in their life, including eating healthy foods, having an enjoyable job, or getting regular exercise.(2) They said this is because they feel ready for the unknown and have peace of mind. And isn’t that what we all really want?

Overspending steals from your number one wealth-building tool.

Your number one wealth-building tool is your income. If you can curb your spending and cut costs, you’ll feel like you gave yourself a raise. Then you’ll have room in your budget to throw more money at debt and save more, too!

Side note: In this episode, I’m partnering with Woman’s Day to show you some products I am so excited to use to keep my home clean and organized. This stuff will not only save you time, but it will also save you money! That way you’ll be able to keep more of your schedule and income for the things you want to do.

 

How Do I Spend Money Wisely?

As you may know, I teach people to work a seven-step proven plan for their money. We call each piece of the plan a Baby Step, and Baby Step 1 is to save $1,000 for your emergency fund.

After that, you’ll be working your debt snowball in Baby Step 2. During this time, you’re saying no to vacations, shopping sprees and dinners out. You’re making sacrifices—but you’re also motivated and making strides!

And right at this point is when it’s so easy to be tempted to treat yourself. After all, you’ve been working so hard to pay down your debt. You’re practically the total embodiment of financial responsibility. Don’t you deserve a break? That cash is just sitting there in your savings account, begging to be spent. Will moving a hundred bucks out of your emergency fund for a new outfit really kill your progress?

Yes! Yes, ma’am, it will! Don’t slip up now. Don’t let that momentary temptation move you backwards.

Before you dip into your emergency fund, ask yourself these three questions about the purchase you want to make:

  1. Is it unexpected?
  2. Is it necessary?
  3. Is it urgent?

If a tree falls on your roof, you lose your job, or you chip a tooth—those are all pretty unexpected, necessary and urgent to fix. Just remember to reserve your savings for true emergencies like that so that when they do arise, you’ll feel at peace and prepared rather than scrambling and stressed!

Another way to eliminate stress and worry from your life is to make sure you have life insurance.
Connect with my friends at Zander to get the best rates today.

How Melvin and Danielle Broke the Spending Cycle

If you want to get motivated to stop spending money, you’ve got to check out my interview in this episode. I am so excited to introduce you guys to Melvin and Danielle. This couple has only been working on Baby Step 2 for a couple months, and you won’t believe how their life has changed already.

Friends, I hope this episode helps you take control of your spending and create a life you love!

Sponsors pay the producer of this show, The Lampo Group, LLC, advertising fees for mentioning their services or products during programing. Advertising fees are not based upon or otherwise tied to any product sale or business transacted between any consumer or sponsor. The following sponsors have paid for the programing you are viewing: Zander Insurance