5 steps to quit spending more than you make

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Today's society is built around instant gratification and as technology progresses it gets easier and easier. If you want to buy something all you need to do is pull out a plastic card and you can get it.

Over the years credit card companies often increase credit limits and banks have issued cards in order to make cash withdrawals easy to obtain 24/7. It's that easy.

Today we no longer have to get money during traditional bank hours (which have been extended anyway, but I digress...). The ability to access money and temptation to spend it treads into dangerous territory, especially as mobile becomes more integrated with finances. If the bills are too high, it is important to take steps to quit overspending.

Consider the situation of the 2007-2009 housing market. A significant part of the problem was due to people spending way beyond their means. This is on a grander scale of spending, of course, but is one good example of how people tend to spend more than they make. It also illustrates the big problems which can arise if your spending gets out of control.

According to Nerd Wallet, in 2016 of households carrying debt, the average U.S. household owed more than $16,425 in credit card debt. Unfortunately, the cost of living is also outpacing increases in annual income by 2 percent. Consumers in Canada are also carrying higher levels of debt.

5 steps to quit spending more than you make

Break the habit of pulling out the plastic

The first step to quitting spending more than you make is to face the fact you cannot afford certain items. It is important to break the habit of pulling out the plastic every time an expenditure beckons to you or an impulse buy screams out your name. Resist. Just put your wallet away. One way people get themselves into trouble is to pay their bills with credit or debit cards and don't carefully track what they can pay off. This can inadvertently give the impression there is more in a bank account than what really exists; or if the credit card is being used in lieu of checks to pay monthly expenses this can give you the illusion of a hefty bank account if you are thinking in the "now" and not the "later".

Distinguish between "wants" and "needs"

If you make a list of everything you bought last month you might find there were many items you bought which do not fall within the "need" category, but instead were either impulse buys or coveted purchases which fall under the classification of "want". If you can differentiate between the two you'll find your monthly spending be reduced significantly and you can begin to catch up on any accumulated debt you have to date and begin to pull yourself out of the red and into the black.

Make a budget

Following a budget isn't always the easiest thing to do, but if you really need to reconcile your earnings with your spending, a budget is the best way to accomplish this. The key to success is making sure once you establish the budget that you follow it carefully. With a budget, all of your finances are laid out in black and white. Numbers don't lie, and if you can manage to stay faithful to your budget, you will quit spending more than you make and probably even put some money aside. I used this tactic years ago and it really worked for me.

Evaluate your expenses and income sources

If you can't follow a budget due to fluctuating income, if you create a spreadsheet it's a terrific tool to evaluate your outgoing and incoming cash. Sometimes, unless you can see your expenses in a tangible fashion, it is hard to realize you are actually spending more than you make. Once you have a layout of all your revenue and expenses side by side it is easier to see the areas where you need to find ways to scale back on in order to balance your budget.

Avoid impulse buying

Impulse purchases are an issue in the United States, according to a 2016 CBS report, the numbers suggest people have a problem with spending beyond what their salaries can afford. If you make lists and make a pact with yourself to stick to them, this is a good way to eliminate unplanned spending. If you are prone to impulse buys, try consolidating your errands into one trip so it cuts back on the time you spend in the stores.

If your credit card bill cannot be paid off each month you are spending beyond your means. This, of course, discounts an emergency that has arisen. An emergency can be considered a car breaking down or a medical doctor visit which needed an immediate payment; an emergency is not a dinner out or a new pair of shoes. Necessities are one thing, but it is important to evaluate if the purchase is truly warranted at a particular moment.

If you consistently spend beyond your means you can find yourself in considerable financial trouble. It is best to nip the problem before it gets out of hand. Once you do this you can begin to quit spending more than you make.