Recovering After Overspending
We’ve all had times when we go a little overboard with our spending. Perhaps it’s one large impulse purchase, or maybe it’s a shopping spree of a weekend where you indulged in everything that caught your eye. Or maybe it’s just a large, expense that you weren’t prepared for, like a car repair or medical bill.
When you spend money that you weren’t planning to, it can lead to a whole range of emotions, and sometimes consequences. The way you react to it afterward, or how you recover from it, can help minimize any negative impact and help you learn to better navigate future spending impulses.
The next time you realize you’ve spent way more than you planned, follow these steps:
Pause
Assess the impact
Unpack the emotions
Make a plan
Move on
Pause
Once you realize you’ve just made a large unplanned purchase (or series of purchases), it’s important to pause for a moment. Take a deep breath before any impulsive reactions kick in.
When we decide to spend, sometimes it feels like the spending floodgates are now open. If you’ve just put $2,000 on your credit card for a couch (that you don’t NEED, but it would go perfectly in your living room so how could you not get it), it’s common to follow that up with several small purchases. Indulging in that new sweater and ordering takeout (despite having a fridge full of groceries) feels inconsequential compared to the $2,000 you just spent. What’s the difference between $2,000 in credit card debt and $2,150, right?
Our brain tends to lump all the smaller, subsequent, expenses in with the larger expenses. It’s like being on a diet and slipping up and eating a cookie, but then deciding since you already broke your diet, why not also have a piece of cake and brownie while you are at it? The caloric impact of the cookie+cake+brownie is worse than just a cookie alone (just like the financial impact of the couch+sweater+take out is worse than just the couch), but the feelings of shame or regret aren’t that much worse, even if the quantity of desserts (or purchases) goes up.
By taking a moment to pause after a purchase, you can help your mind to reset or to close the spending floodgates. Sure, you’ve decided to spend that money on the couch (whether it was a good decision or not isn’t relevant at this point), but that doesn’t mean you’ve permitted yourself to spend on everything else that pops up immediately after.
Assess the impact
When you overspend, many strong emotions may come with it, excitement, joy, guilt, shame, etc. When you realize that you went a little overboard or spent more money than you planned, the next thing you want to do is get clear on the potential repercussions. So let’s set those emotions aside for a moment.
Asking yourself a series of questions can help identify the impact of what has happened.
How much have you actually spent?
You might have the same intense feelings about overspending regardless of whether you overspent by $20 or $2,000.
The scale is important to note.
Was it just one purchase, or was it a string of purchases?
Did one unplanned purchase change how you evaluated other purchases afterward?
Are there future expenses that will come as a result of this purchase?
Often, we are focused only on the upfront cost and don’t fully account for the ongoing expenses or maintenance costs related to some purchases.
Is there a one-off cost, like needing to bring your new jeans to a tailor?
Or are there ongoing costs, like the food, toys, and vet bills you’ll need to pay for if you’ve just adopted a new puppy?
Are there any immediate consequences for spending that money?
Will you have an overdraft fee?
Is making your rent payment next week going to be a struggle now?
What is the long-term cost?
The actual dollar amount can feel very abstract. Instead, think about what other purchases or opportunities may be out of reach as a result of this purchase.
Will this make it harder to save for the trip you have coming up?
Does this extend the timeline before your current debts are paid off?
Was it a need? A want?
Understanding if it was an essential purchase that you weren’t prepared for, or an impulse splurge will change what steps you may take to prepare for similar scenarios in the future.
Expenses often fall somewhere between a need and a want, which makes them tricky to unpack. Sure, you may need a car, but would a lower-priced car have worked?
And yes, I need groceries, but do I need $35 worth of snacks from Trader Joe’s? It’s easy to convince ourselves that a purchase is a need when really it’s a need wrapped up in a want.
Unpack the emotions
Most money-related decisions are driven more by emotions, than math. So your overspending habits are likely filled with several emotions. Once you’ve identified the financial impact of your purchase, it’s time to explore what emotions may have led to this purchase, along with what the emotional impact is afterward.
What emotions were you feeling before you decided to spend?
You may shop more when you feel lonely, insecure, excited, or anxious. By asking yourself what you were feeling before the purchase, you will begin to notice if there are any patterns of specific emotions that frequently lead to unplanned spending.
What emotions did you feel while you were spending/ or once you’d made the decision to spend?
For some, the act of spending can be quite exhilarating. If what you are really seeking is the high of spending (more so than the actual thing you’ve purchased), this is helpful information. Are there other things you can do to get that dopamine hit?
What did you feel immediately after purchasing it? What do you feel now?
Are you still excited about it afterward? Or are you feeling a wave of regret or guilt?
If you are still excited about it, perhaps it was a worthwhile purchase, despite the impact or consequences that will follow. Or maybe the reality of the impact hasn’t sunk in yet.
If you are feeling a spending hangover, is it because you bought something that in hindsight you know you don’t need? Are you feeling bad about not sticking to your spending plan? Are you anxious about the consequences?
Unpacking what’s at the core of your emotions, before and after the purchase, may help you make more informed decisions or exercise a bit more impulse control when you are in that situation again.
Make a plan
Now that you have a clearer understanding of what happened and why it happened, it’s time to create a plan.
Where is this money coming from? If you put it on a credit card, what is your plan for paying the balance off? If you’ve dipped into your savings account to cover this expense, how will you replenish the account?
Can you return it? Or can you re-sell it?
If you’re feeling regret about this purchase, it’s worth asking if you can return it. Sometimes it feels easier just to pretend a like this purchase didn’t happen, rather than facing the discomfort of having potentially made a mistake. And yes, the process of returning something is a hassle, however, dealing with that hassle and discomfort may be well worth it if it allows you to undo the financial impact of this purchase.
Do you need to adjust your spending plan going forward?
If it will take a few months (or maybe years) to pay off your credit card bill, or to rebuild your savings, that means you will have less money available to spend in the coming months. What will you do differently to accommodate for this new expense? Is there something you will cut out or cut back on to free up that extra money?
Can you earn more to cover the added cost?
Instead of looking at what you can cut, another option is bringing in more income. Are you able to get additional hours at work? Is there a side hustle you can pick up? Are there things you can sell?
Learn for the future
No one consistently spends exactly as they planned. So when there is an unplanned expense, reflecting on what happened allows you to learn from the experience. Did you not adequately plan for or anticipate an inevitable expense? Or are the certain situations or emotions that trigger you to spend more impulsively?
With a better understanding of your spending habits, you’ll be better equipped to navigate similar situations in the future.
Are there certain situations or environments that prompt you to spend more than you plan?
Do specific stores consistently result in overspending? Do you spend more when you are in the company of specific people?
Are there certain times of the day that lead to unplanned purchases (scrolling Instagram at 11 pm)?
Do you spend more frivolously immediately after payday?
Do emails from retailers with special promo codes lure you to check out their website?
Are there certain feelings or emotional states that prompt you to spend?
Do you spend more when you are feeling sad or lonely?
Do you spend more when you are excited and have something to celebrate?
Do you buy a new outfit every time you feel insecure about your work performance?
If you pay attention to your spending, you may notice some clear patterns. If there are consistent emotions or situations that lead to impulsive spending, are there ways to avoid those triggers? Are there alternative strategies for coping with those uncomfortable emotions?
While you may not be able to completely avoid those situations or triggers, being mindful of them may help to reduce the impact on your wallet.
Move on
After you’ve determined the impact, unpacked the emotional components of the expense, and learned what you need from the experience, it’s time to let it go. Holding onto feelings of shame, regret, or embarrassment won’t help.
Learning to shift your spending patterns can feel like a daunting task. If you are struggling to make effective change, consider getting outside support. Having someone to talk with can help make the financial journey feel less isolated. Schedule a call with Sarah to learn more about 1:1 financial coaching options.
