Do you often find yourself running out of funds before the month ends or before the next payday? Does your spending seem to spiral out of control when faced with enticing offers online or at the mall? If so, you’re not alone. Overspending is a common financial pitfall that many people face. Here are some tips on how to stop overspending in order to have better control over your finances.
The Temptation for Ilonggos and How to Stop Overspending
Iloilo City boasts an array of attractions that can easily tempt anyone into overspending. From malls that frequently hold enticing sale events to an impressive selection of restaurants serving delectable cuisine, the city offers plenty of opportunities for indulgence. Additionally, its convenient access to both inland and coastal resorts means that there are numerous ways to spend leisure time and money.
However, these temptations need not lead to financial troubles. In this article, we’ll delve into common scenarios that trigger overspending, the adverse consequences it can have, and most importantly, effective strategies for regaining control over your finances.
The Overspending Scenarios
Here are some scenarios you can avoid in order to stop overspending in order to grow your savings.
Retail Therapy Gone Awry
We’ve all experienced the allure of a sale or irresistible deals. But for many, this leads to unnecessary purchases and a bloated credit card statement.
Take the case of Marie, an online writer based in Jaro, Iloilo City, who eagerly embarked on a shopping spree, thanks to a tempting credit card offer. “The credit card promotion allowed me to defer payments and opt for a three-month installment plan, and I found myself repeatedly swiping my card. Unfortunately, this habit persisted for several months, diverting my funds towards settling credit card bills instead of bolstering my savings,” she shared.
Dining Out Dilemma
Iloilo City is renowned for its diverse culinary scene, with restaurants offering an enticing array of cuisines. The mouthwatering photos of delectable dishes that flood social media feeds can be incredibly tempting, often leading Ilonggos to dine out or opt for takeout more frequently than they intend. These culinary temptations are just one example of how easily overspending can occur in a city known for its rich and flavorful food culture.
“I am a foodie who loves to eat out in order to explore new dishes and share them on social media,” admitted Donna, a resident of Oton who works for a BPO company in Iloilo City.
“Also, being a K-drama enthusiast, I frequently witness characters indulging in various delectable dishes in the scenes. There was this one scene where the actors were relishing dumplings, and I found myself practically drooling. In the spur of the moment, I placed an order for dumplings via a delivery app. It’s a recurring scenario,” she said.
“Come to think of it, I spend PHP 4,000 a month on dining out and food deliveries, which constitutes overspending,” she reflected.
Impulsive Online Shopping
One-click buying and flash sales can be enticing traps.
Consider the case of Shirley, a diligent home-based freelancer living in Jaro. Her busy schedule confines her indoors, making online shopping her go-to leisure activity.
She confessed, “I opt for cash on delivery, but there are moments of impulsive buying when I utilize my e-wallet’s credit feature, subjecting me to interest charges in addition to the shipping charges. Admittedly, it’s challenging to rein in these purchases, especially when the shopping accounts I follow bombard me with alluring promos. It’s not their fault, though. The constant temptation has, in some ways, hindered my ability to save effectively.”
The Effects of Overspending
With every action, there is an equal, opposite reaction. And overspending is no exception. It has adverse effects on our own finances. Below are just some of them.
Debt Accumulation
Overspending often leads to mounting credit card debt, which can be challenging to pay off, especially because of interest rates AND finance charges.
Stress and Anxiety
Financial stress is a leading cause of anxiety and can take a toll on your mental health.
“I wasn’t accustomed to have debts, so I wanted to clear my credit card balance as swiftly as possible. However, the necessity to wait for my salary to make gradual payments left me feeling anxious. I reminisced about the days when I had no credit card dues, cherishing the sense of peace it brought me,” Marie shared.
Limited Savings or No Savings at All
Overspenders often struggle to save for emergencies, retirement, or financial goals.
“In those periods when I shopped too much online, I couldn’t allocate funds towards my savings or contribute to my mutual funds, which I had initially intended for my retirement,” Shirley explained.
Missed Investment Opportunities
Money spent on frivolous purchases could have been invested for long-term financial growth.
Techniques to Combat Overspending
Prioritize Needs Over Wants: Distinguish between essential expenses and discretionary spending. If you’re tempted to make an impulse purchase, wait for at least 24 hours. You’ll often find the urge has passed. Use cash or a debit card for daily expenses. Leave your credit cards at home to avoid temptation.
“Drawing lessons from my experience, I ceased using a credit card for non-emergency expenditures,” Marie stated. “In doing so, I was able to regain my peace of mind.”
“To reduce my online shopping expenses, I started making my purchases in the local malls. That saved me on shipping fees and credit interest rates and exposed myself to more sunlight which is good for my health,” said Shirley.
Create a Budget
Establish a monthly budget that allocates specific amounts for necessities, savings, and discretionary spending, and stick to it.
“I’ve been diligently crafting a two-month budgeting plan. To illustrate, by September, I’ve already outlined my budget for both October and November. While this approach may curtail my freedom to go out and socialize, extend emergency financial support to friends, or indulge in personal purchases because it’s not in the budget, the rewards far surpass these constraints. My savings, albeit small, have saved me several times during financial struggles,” shared Marie.
Set Realistic Financial Goals
One of the key strategies for curbing impulse spending is to define clear financial objectives. Whether it’s establishing an emergency fund, saving for that dream vacation, or preparing for a comfortable retirement, having well-defined goals provides a strong motivation to resist impulsive purchases.
Grow Your Money Instead
When you’ve mastered financial discipline, it’s time to make your money work for you. Here are some ways you can do just that.
Invest in Mutual Funds
Mutual funds are a way to invest in stocks, bonds, and other assets with the help of investment professionals. Companies such as Sun Life Philippines offer a variety of mutual funds that cater to different risk appetites and financial goals. You can open a Sun Life mutual fund account for as low as PHP 100 and gradually grow it from there.
The company also offers Variable Universal Life (VUL) Insurance products that offer the combined benefit of life insurance protection and investment, providing you with financial security and peace of mind while you grow your money over time.
Start a Business
Entrepreneurship can be a path to wealth creation but involves risks. Consider your expertise and passion when choosing a business to start.
Savings Accounts
While these offer lower returns compared to investments, they provide a safe place to park your money.
Consult a Financial Advisor
A financial advisor can provide personalized guidance on investment strategies tailored to your financial goals and risk tolerance. Sun Life has one of the best pools of financial advisors; you can get in touch with one via www.sunlife.co/TalkToAnAdvisor.
Your Partner for Life: Sun Life Philippines
Sun Life offers a range of instruments and tools that can be immensely beneficial in growing your money. Whether it’s establishing an emergency fund, saving for that dream vacation, starting a business, preparing for a comfortable retirement, or leaving a legacy to your children, having well-defined goals provides a strong motivation to resist impulsive purchases and helps you prepare for life’s milestones.
Sun Life can guide you in charting out these objectives and creating a roadmap to achieve them.
Breaking free from overspending is crucial to achieving financial security and growth. You can regain control of your finances by identifying overspending scenarios, understanding their effects, and implementing effective techniques.
It’s time to stop overspending and start growing your money. Your financial well-being depends on it.