Don’t let overspending be your undoing

Money and Life
(Financial Planning Association of Australia)

Do you struggle to control your spending around your friends and family? If the urge to ‘keep up’ with a certain lifestyle is stretching your finances, it could be time to take action.

From splitting the bill at an expensive restaurant, to having the ‘right’ house, car and clothes, many of us fall victim to overspending. But if you regularly suffer from buyer’s remorse, or spend over and above your means, it’s time for a serious reality check.

Overspending can quickly spiral into long-term debt, especially if you use credit cards to try and bridge the gap.

Young Australians are particularly at risk, taking on debt at a far earlier age and carrying it longer than ever before. Research by RateCity shows that 42 per cent of those aged under 24 have between $10,000 and $30,000 in personal debt, not including a mortgage.

Even if you’re not living paycheck to paycheck, overspending will prevent you from reaching your longer term financial goals, like financial security and financial freedom.

Fortunately, spending habits are just that – habits – and they can be changed. Here’s how to avoid the debt spiral and get your finances on track.

1. Identify your risky behaviours

Do a financial health check and work out where the majority of your overspending happens.

Is it a penchant for designer clothes? An addiction to expensive electronics? Or a love of fine dining? We all have vices that threaten to throw us off track, so look at the numbers and be honest with yourself about which behaviours are forcing your finances off course.

If those behaviors are closely associated with certain friends, family or work colleagues, it could be time to reevaluate your unhealthy relationships.

2. Associate with people who share your values

Once you know what’s driving your poor spending habits, use it to take action. Distance yourself from any negative influences and find others who better fit in with your long term plans. Being surrounded by likeminded people will help restore your bank balance in no time.

3. Find alternatives

If your social life is at the center of your overspending it could be time to make some healthy swaps. Try suggesting low-cost alternatives such as bush walking, art classes or the beach. You might even meet new people who share your values.

Lead by example and encourage good financial practices among your friends and family. Be upfront about your goals and values, without being pushy. True friends will be supportive and want to spend time with you anyway.

4. Make a financial plan

Taking control of your spending starts with evaluat