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Budgeting & Saving

How to Avoid Overspending Each Month

For most people, knowing how much money they have at the beginning of the month is pretty easy. What's harder is knowing exactly how much you've spent in the past month, and what you spent it on. But if you're ending the month in the red, you're overspending.

Overspending and shelling out money for things you don't use is something that many people do each month. But it can hurt you financially, especially if it means you're paying fees, credit card interest and other charges you really shouldn't be.

With a few changes, you could put those poor spending habits behind you. And if you save enough money to get back under budget, you can even use that money for something else, like saving or paying down existing debt.

Check out these five tips to uncover where you're overspending and how you can get better control of your finances.

1. Take Inventory of All Your Spending

At the end of the month, review all your debit and credit card transactions and look at your bank statements to see how much money you've spent and what you've spent it on. You could also consider saving all your receipts or using a money tracking app to simplify this process. Doing this will help you understand where your money is going, which is the first step to realizing how you are overspending. If you've already created a budget, match it against your actual purchases to identify areas where you're spending more than you planned. If you find you're spending too much in certain categories, consider cutting back the next month to get back on budget.

2. Delete Unused Apps, Services and Subscriptions

Apps and subscriptions are easy to sign up for. They're also easy to forget about. Look through your phone and credit card bills for any recurring subscriptions that you no longer use. Cutting unused or underused apps out of your monthly spending could save you hundreds of dollars each year. If you have subscriptions you can't live without—like music or video streaming—look for ways to save. Maybe split the cost of a membership with a friend or find services like Spotify that include access to other apps like Hulu with some subscriptions.

3. Make Sure You're Not Paying Unnecessary Fees

Banks often charge fees if you let your account drop below a certain balance or when your account is overdrawn. These charges can add up over time. Take a look at you bank statements to see if you're getting charged fees without knowing it. Forgotten fees can occur across many types of accounts, including credit cards, bank accounts, investment accounts, and even phone and cable bills. Try to figure out exactly what you should be paying for all your services, then match that against your actual monthly spending to see if you're paying for things you shouldn't be. Also be sure to maintain at least the minimum balances in your bank accounts to avoid charges, and always have enough money in your checking account to cover purchases so you don't rack up overdraft fees.

4. Plan Ahead to Avoid Unnecessary Purchases

A lot of unnecessary spending occurs when you're away from home and grab something you need from a convenience store. This can be anything from lip balm to a water bottle, and over the course of a month, these purchases can add up. Consider making a list of things you know you'll need while out and double-check before leaving home to make sure you've brought everything you'll need for the day. If you eat out a lot while at work, think about packing a lunch in advance or planning where to eat so you don't have to settle for expensive last-minute options. Making grocery lists and planning purchases in advance can also help you cut back on costly impulsive purchases.

5. Continue to Track Your Spending

Once you've reviewed your spending habits and found things that you can cut out, continue to track your spending so you don't fall back into the cycle of overspending every month. Cutting out unnecessary spending now may help remind you not to make thoughtless or impulsive purchases in the future. And if you've created a budget that helps you track your income and expenses, make sticking to that budget a top priority. It's important to understand how to change your habits so you can stop overspending and start saving more money over time.

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