Your salary should cover all your monthly expenses, with some money left over for fun. So why do you always seem to run out at the end of the month? Perhaps the blame lies with overspending.
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The good news? The overshoot is reversible. Read on to find out six ways we overspend and the changes, including some simple ones, you can make to control your spending.
Pay with credit
“Every time you buy something with a credit card, you’re overpaying and stealing your future,” said Jay Zigmont, PhD, certified financial planner and founder of Childfree Wealth. “With inflation, the Fed increases interest rates, which means credit card interest rates also increase. The problem is that we don’t see the credit card interest rate. credit in the price of something we buy If you buy something for $100 and have a credit card interest rate of 16%, then a year later that item has cost you $116.
If you have to pay with a credit card, it’s crucial to pay the bill each month.
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“As credit card balances increase, so do monthly minimums,” Zigmont said. “And then you have less in your pocket each month, which forces you to put more on credit, and the cycle continues.”
“To get out of debt and stop paying more, the first step is to lock up your credit cards and stop going into more debt. It’s almost impossible to get out of debt if you take on even more of it. In your online applications, remove all your credit cards and switch to a prepaid debit card that you prepay monthly. This way it will stop the senseless spending.
You walk down the aisles of your local store, or scroll through Amazon late and late at night, and see something you want and throw it in your cart, you don’t need it. You just want it.
Despite economic fears, Americans are spending more on impulse purchases this year than last. A survey of 2,000 adults commissioned by Slickdeals showed that 64% of people have increased their impulse spending over the past two years, which currently costs the average person $314 per month. That’s up from $276 last year and $183 in 2020.
Everyone wants to splurge once in a while, so add your impulse buys to your monthly budget, capped at what you can afford, like $50. Or give yourself a week to think about it. If the item still bothers you after time passes, see how to fit it into your budget. You’re just as likely to forget that you ever thought about buying.
Payment of late fees
Late fees are money you don’t have to spend at all. While it’s easy to forget to pay a bill by its due date — we’ve probably all done that — it adds up. In a March 2022 report, the Federal Trade Commission said the average charge for a late credit card payment was $31 in 2019. The more often your payment is past the deadline, the more you will pay. The FTC said late fees for the first time average $26 or $35 for later fees. In total, Americans paid $14 billion in late fees in 2019.
It’s not just credit card companies that charge late fees. If you pay your cable bill after the due date, for example, you will be charged late fees. The amount varies by state. To avoid late fees, consider putting your recurring monthly expenses on automatic payment.
A budget allows you to manage your monthly expenses by taking into account your income and your fixed expenses: rent, insurance, car payment, student loan, automatic savings, etc. Also consider discretionary spending, from your morning coffee to your monthly night out with friends.
If you don’t make a budget and stick to it, your checking account could dry up before the end of the month. By using one of today’s many budget apps, you’ll know where you stand with each monthly spending category, reducing the chances of overspending.
Get food delivered to the restaurant
The pandemic has given food delivery a big boost, with people grateful to be able to enjoy food from their favorite restaurants, even if they were closed or restricted to the public, and without contact with the public. Diners were willing to pay for their safety, and we always appreciate the service – and pay for it.
“Processing and delivery costs are up to 30% (of) a dinner bill,” said Melanie Simons, CEO and co-founder of ReFrame Wealth. “Instead, order takeout and collect it yourself, order from restaurants that do their own free delivery, and subscribe to meal kit deliveries like HelloFresh that bring all the ingredients to cook at home. house right at your doorstep.”
Traveling in high season
Sometimes, Simons said, people spend way more than necessary when traveling.
“By simply planning trips in advance and selecting destinations at lower prices during certain seasons, people can save thousands of dollars on their trips each year,” she said. “For example, a trip to the Caribbean islands during the shoulder seasons – typically September through November – can save a ton of cost and be incredibly enjoyable. Likewise, a summer vacation to beautiful ski areas like Vail or Les Alps means half price accommodation.
Overspending should not hurt your budget. A few changes to your habits — and a little planning — can keep you from spending more than you need to.
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