How to Stop Spending Money You Can't Afford To

Are you constantly spending too much cash? Try these tricks to stop spending money that you can't afford to spend.Image source: Getty Images.

Do you find yourself constantly wondering where your cash has gone or looking at purchases you regret? If so, you're not alone. Controlling spending is very difficult and many Americans end up overspending and buying more than they can afford. In fact, this is one reason why credit card debt across the country is so high. 

While spending too much cash is common, it can compromise your other financial goals. You don't want to spend more than you should, and fortunately there are some proven techniques that can help make sure you curb the habit. If you're not sure how to stop spending money you can't afford, just try these seven techniques:

• Make a detailed budget
• Keep track of every dollar you spend
• Switch to cash temporarily and use an envelope-based system
• Institute a 24-hour rule
• Take your credit cards off your online accounts
• Automate your savings
• Allocate a set amount of fun money you don't exceed

1. Make a detailed budget

If you find you have a spending problem, giving your dollars jobs can be a good way to put an end to your issues. When you make a detailed budget, you can allocate a certain amount of cash to every different category of spending you have, such as dining out, clothing, entertainment, transportation, daycare, rent, savings, insurance, and so on.

If you make sure you budget in for saving money and that your spending plus savings equals your income, you'll know exactly how much you can spend responsibly.  This way you won't overspend since you can set limits for yourself on the different kinds of splurges that you enjoy. 

2. Keep track of every dollar

Making a budget only works if you ensure you're adhering to it -- and you have to track your spending to know whether you're sticking to your limits. Tracking spending not only helps you to know if you're sticking to your budget, but it can actually help you to limit spending as well. After all, if you know you have to write down that purchase in your spending spreadsheet, you may think twice about making it. 

There are apps to help you track spending. However, if you're really having a problem with your cash flow, you may be better off doing it manually. This would mean keeping all your receipts and entering them into a spreadsheet at the end of every day or writing down everything you buy -- including the price -- in a spending journal. 

When you keep track of every dollar, you force yourself to be accountable, and you can get a much clearer picture of where your spending problems lie. 

3. Switch to cash and use an envelope-based system

Using credit cards is important to build credit. Plus you can earn rewards. Unfortunately, some people just have a hard time using cards responsibly. Cards can encourage overspending because you don't actually have to experience the pain of handing over cash -- and because it's easy to lose track of whether you've made too many purchases to pay off at the end of the month. 

If you're having a hard time managing your spending, it may be time to put the credit cards away for a little while and switch to a cash-only envelope system. Basically this system works by putting a designated amount of money into an envelope for each category of spending. If you've budgeted $100 for eating out, you'd put $100 in your eating out envelope. When the money in the envelope has been spent, you simply can't spend any more until next month when it's replenished. 

4. Institute a 24-hour rule

Splurging is one of the big reasons for overspending and it can happen when you make a purchase without really thinking about the long-term consequences. Fortunately, there's an easy way to put an end to these mindless purchases: just institute a 24-hour rule.

With a 24-hour rule, you forbid yourself from buying anything that costs more than a certain amount until you've thought on it for 24 hours. You could, for example, say you'll buy nothing over $50 without thinking about it for a day. Or for a twist on the 24-hour rule, you could wait a full day for each $50 of the purchase price. So if a purchase was $100, you wouldn't buy the item without thinking about it for at least two days. 

Often you'll find that by simply waiting, the idea of the purchase will lose its luster and you'll end up not buying it at all.

5. Take your credit cards off your online accounts

Mindless online spending is another big reason for blowing budgets, but there's a simple fix: don't store your credit cards on any online website. If you have to manually enter in your card information each time, this takes a lot more effort and is likely to deter you from making purchases unless you really want to put in the time. 

6. Automate your savings

Another great way to stop spending money you can't afford: make sure the money isn't available to you. That cash in your checking account may seem attractive and it's tempting to use it to purchase something you've got your eye on -- so don't leave it there. Instead, each payday, set up automatic transfers of an appropriate amount of money into retirement accounts or other savings accounts. 

If you don't have the money easily available to spend in your bank account, you're far less likely to make purchases you don't really need. This is especially true if you avoid using credit cards and temporarily stick to only cash or debit cards while you're trying to get a handle on your spending.

7. Allocate a set amount of fun money you don't exceed

If you try to be too restrictive and deny yourself everything you want, you're likely to end up rebelling and making purchases. So make sure you give yourself a little bit of leeway by deciding how much you can afford to spend. Allocate a small amount of cash each month that won't compromise your important financial goals and spend that money on anything you want -- guilt-free. 

You really can stop overspending

While it may seem hard to get your spending under control, taking these seven steps should help make the process easier. The formula to stop spending more than you can afford is actually pretty simple: make impulse buys harder, make it easy to live on a budget, and monitor where your money is going. If you can do these things, you can make sure your cash is going where it should and overspending will become a thing of the past.