How can I create a spending plan to stop overspending?
Write down your take-home pay, as well as what your bills are, necessary costs, debts, savings plans and anything left over. Decide on a limit for non-essential items. Then check your purchases to see if you're on track. You can even use a different account or spending limit for these items. Don't be too strict; allow yourself to make some purchases without guilt. Most budgets aren't realistic if they don't allow any discretionary spending.
Creating a spending plan you can follow
First, start with your average monthly take-home income. Make a list of your regular bills, including housing, utilities, insurance, subscriptions and debt payments. Next, estimate necessary expenses like food, transportation, medicine and household items. Refer back to bank and credit card statements to ensure your plan is based on what you actually spend rather than what you would like to spend.
Think about how much you will contribute toward savings, debt reduction and non-monthly expenses. Planning ahead for repairs, annual bills, gifts and vacations makes them easier to manage. Calculate the annual cost and divide by 12 to find out how much to set aside each month.
Give flexible spending a clear limit
Put a cap on spending for things like clothes, hobbies, dining out, entertainment and other discretionary items. It's easier to stick to an allowance than it is to adhere to a pledge to cut back. If you're prone to over-spending online, you might want to stash that cash in a different account or carry a cash card or prepaid card that has a fixed cap.
Allow yourself some time before buying anything. Make a list of the items you'd like to have, put them off for a while and then come back and see if the item makes sense in terms of your goals and budget. Don't buy something just because there's a sale on it.
Check your bank statements every week. See if you have habits of spending in any categories. Don't berate yourself if you overspend in one area. If there's an area where you're consistently going over budget, then change either how much you've set aside for it or when you have access to that money. If your plan doesn't allow any normal spending pleasure, it might be overly restrictive and you may experience overspending later.
If you're struggling with debt, have been late on paying your bills or can't stop buying things, you might want to speak to a nonprofit financial counselor or other appropriate advisor. A therapist could assist with the feelings tied to excessive spending, and a financial expert could help get your bills in order and make a repayment plan.