How to Control Overspending Money and Start Saving: A Guide to Financial Health
If you want to save more and secure your financial future, then learning how to control your spending is a great place to start.
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Learning how to stop spending money unnecessarily is one key step you can take to increase your savings and achieve your financial goals.
Spending more money than you need might include:
Whichever one it is, spending money needlessly will lead you to exceed your budgeted expenses and reduce your savings.
Personal finance experts surveyed by Khaleej Times all agree that overspending is a key reason for low savings in the UAE, despite zero personal income taxes.
In some cases, people start accumulating debts (especially credit card debt) to finance a lifestyle of overspending that puts their financial future in jeopardy.
If any of the above applies to you, then you can learn how to stop spending money excessively today if you know which areas to focus on.
In this article, we will highlight some tips that will help you control your spending and invest in your future:
[Do you want to save more money to achieve your financial goals? Sign up to MALY to control overspending and grow your bank balance with our automated savings and multiple Visa debit cards.]
Overspending means spending more than you planned, but many people in the UAE don't even have a budget. Without a spending plan, it's easy to spend too much.
“Thanks to discounts galore and lack of a working budget, some consumers tend to overspend on unnecessary items,” says Damodhar Mata, a financial advisor at Nexus Insurance Brokers (one of the experts surveyed by Khaleej Times). “With the emergence of the Buy Now Pay Later (BNPL) and easy access to credit cards, overspending is on the rise,” said Mata.
Without a budget, overspending will continue to be a problem that will lead to you getting yourself into debt.
Before you shop, think about what you can afford. Set limits and stick to them to avoid stress and keep your finances on track.
If this is your first time preparing a budget, the 50/30/20 rule is a good place to start.
With this budgeting system, 50% of your income will finance your needs (food, utility bill, clothing, health insurance, car insurance, etc.) and 30% of it will finance your wants (streaming services, eating out, travel, gym memberships, etc.). The remaining 20% will be saved or invested.
The next step is to outline your spending habits (all your typical needs and wants) for a month. You might be able to recollect all of them or you might need to get a bank statement to have an idea of the items that fall under those two categories.
You might also need to create subcategories to make planning easier later on. For example, your needs might be subdivided into food and groceries, rent, utility bills, clothing, transport, and insurance.
Once you have outlined all your typical needs and wants (and grouped them into subcategories), you can then evaluate your spending habits to see if you are already overspending.
If your needs exceed 50% of your income or your wants exceed 30% of your wants, then you are already overspending.
Also, you can identify which specific subcategories you seem to be overspending on. Are you paying too much for your streaming subscriptions? Or maybe you’re eating out too many times a month?
Once you have prepared a budget and identified the causes of your overspending, you can then take the next step: creating smart saving strategies.
You might be surprised to find you can further reduce your cost of living by cutting down expenses on those items that don’t look problematic.
Let’s consider some smart saving strategies across various subcategories:
Below are some tips to stop wasting money on food:
Follow these tips to reduce spending on clothes without reducing quality:
You can also cut down on your entertainment spending by doing the following:
Rent or mortgage is often the biggest item on most households’ budgets. You can lower your expenses by following these tips:
Utility bills are a big part of the budget of many UAE households. You can cut back on your bills by:
We’ve looked at how to stop spending money by preparing a budget and keeping your monthly expenses within 80% of your income. Now let’s consider a more important issue: how to stick to your budget.
To begin, consider the words of William Feather, the late American publisher and writer: “A budget tells us what we can’t afford but it doesn’t keep us from buying it.”
His point is that while preparing a budget is important, sticking to it is even more important.
Your budget might tell you that eating out for the fourth time this month is overspending but that doesn’t stop you from doing so anyway.
There is a psychological and moral issue here, of course. You must develop the willpower and discipline to say no to temptations to overspend (especially with impulse purchases) and stay within your budget. It is part of what it means to be human.
But willpower is not always sufficient; we often need external help to propel us in the right direction.
Thankfully in the age of limitless choice, there’s a new wave of saving apps that are designed to help you stick to healthy spending habits and build your financial wellness.
MALY’s multiple Visa debit cards and automated savings are the UAE’s leading example of this new service, but how can it help you cut out overspending and start saving?
“Save before you spend” is sage financial advice that became popular with the publishing of The Richest Man in Babylon by George Clason. The book showed how paying yourself first (saving) before others (spending) is the foundation of wealth.
In the words of Warren Buffett: “Do not save what is left after spending, but spend what is left after saving.”
When you save before spending, you “force” yourself to exercise the discipline needed to stick to your budget.
If your savings are in your checking account, then you can always spend it on the next shiny thing that is tempting you. But if they have been locked away in a savings account, savings app, or MALY savings card, you will learn how to be budget-compliant.
This is what Maly’s automated savings product offers. With it, you can schedule Maly to remove a certain amount from your bank account on a particular day, usually your payday.
Saving before spending in this manner will make it easier for you to achieve your savings goals.
With MALY’s multiple Visa debit cards, you can create a debit card for each of your expense subcategories and load the budgeted amount for each subcategory into the associated card.
For example, if the budget for food and groceries is AED 5,000 and that of entertainment is AED 1,000, you will load those exact amounts into the cards created for them.
MALY’s multiple debit cards help you save and spend wisely
Since these are debit cards, you cannot overdraw on them – you can only use cash available on the card. Once you have exhausted AED 1,000 on your entertainment card, there is no credit for further spending.
Once you lock in your savings amount, you can’t overspend your budget; you can only transfer funds from another subcategory, like food and groceries.
When you realize that overspending on entertainment may mean sacrificing food and groceries, you will be encouraged to discipline yourself to spend within your means.
Multiple debit cards also make it easy for you to track your spending. Instead of using budget apps to track your spending (so you can know when you are approaching the budget limit), you can just check the balance on your cards from your Maly account.
Combining these two products will help you stick to your budget and stop spending money unnecessarily.
Budgeting is hard and sticking to a budget is even harder.
While the tools above can help you overcome the most common saving challenges, there is also a mindset change that can even make saving easier.
First, remember that being a saver can bring freedom and liberty. “By sowing frugality we reap liberty, a golden harvest," according to Agesilaus, an ancient Spartan king.
Have you seen the debilitating condition of someone overwhelmed with debts? Poor credit score, mental health, and social capital are some of the consequences of debt. No wonder Ralph Waldo Emerson said that “a man in debt is so far a slave.”
Making all the financial decisions above might be hard but once you know how to stop spending money unnecessarily, you will be free from the slavery of consumerism and debt. You can sleep with your two eyes closed when you are living within your budget.
Second, prudent money management leads to wealth and wealth is positively correlated to happiness, independence, and freedom. “If we command our wealth, we shall be rich and free. If our wealth commands us, we are poor indeed” said Edmund Burke, the father of British Conservatism.
If you have doubts about making the effort to take control of your spending, remember the benefits of financial health to you and your loved ones – the most important thing of all.
[Do you want to stop overspending and start saving to build wealth? Sign up for Maly to automate your savings and control your spending with multiple Visa debit cards.]
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