Perhaps you recently overspent at a friend’s wedding or rented a cottage that strained your budget, leaving you uncertain about covering the expenses. You’re not alone in this predicament. A recent study by CIBC revealed that over half of Canadians tend to spend more during the summer months, whether on travel, dining out, or entertainment. Additionally, 74% of Canadians are finding it increasingly challenging to save money due to the escalating cost of living.
Experiencing financial excesses, whether as a one-time occurrence or prolonged overspending, can evoke feelings of stress and anxiety when the bills arrive. To address this, we sought advice from two experts on managing a financial hangover and avoiding overspending in the future.
Recognize and Address Your Emotions
When you exceed your budget, it’s common to feel emotions like shame and anxiety afterward. However, it is more constructive to show self-compassion, understand your financial choices, and learn from them. Shaun Maslyk, a financial wellness advocate and certified financial planner, advises against self-criticism as it exacerbates the situation and may lead to avoidance of debt repayment. Identifying the emotional triggers behind overspending is crucial, as spending can sometimes serve as a coping mechanism for emotional discomfort.
Common emotions driving overspending include fear, greed, and stress. Recognizing and acknowledging these emotions can lead to better financial decisions. Bourree Lam, a journalist at the Wall Street Journal, suggests an exercise called “How to YOLO responsibly” from her book, which involves tracking impulse purchases and evaluating their long-term impact.
Recover Financially
After understanding the reasons behind overspending, creating a plan to pay off the debts is essential for regaining financial stability and confidence. Maslyk recommends reviewing expenses to free up funds and advises against drastic budget changes that may feel restrictive and unsustainable.
Lam suggests prioritizing high-interest debt repayment in your financial recovery plan. Focus on paying off debts with the highest interest rates first, even if it means adjusting savings goals temporarily. Setting clear financial goals is crucial to avoiding future regrets. Identifying a primary financial goal helps align spending with personal values and reduces impulsive purchases.
Avoid Triggers and Practice Mindful Spending
Identifying triggers that lead to impulse buys and emotional spending is vital in preventing future financial regrets. Lam recommends minimizing triggers by changing routines, such as avoiding store-lined walks or blocking shopping websites. Taking a moment to pause before major purchases can help curb overspending and promote mindful spending.
Regularly reviewing your financial status and aligning spending with personal values can reduce the temptation to overspend. By staying mindful of your financial decisions and adjusting as needed, you can maintain financial stability and avoid unnecessary expenses.
