8 Ways To Take Control Of Your Spending That Really Work

A few years ago I met with Emma, a young mother who was recently divorced, deep in debt, and lacked a stable income. On top of that, she was spending thousands of dollars on dresses, shoes, jewelry, and other nonessentials. “I know I shouldn’t- I just can’t help it. I don’t know why I keep buying all this stuff!” Still, Emma wanted to get her financial affairs under control and save some money for her kids’ college education despite not having any retirement savings herself.

I’d love to say her story is isolated, but Compulsive Buying Disorder – a type of impulse control disorder – is widespread and varies by severity. Pervasive marketing of all kinds, increasingly tailored to our unique desires, makes it even more difficult to resist temptation. Making matters worse, it can feel impossible to find financial advice based on science, logic, and reason that can make a material change on spending habits.

Strategies That Work

I spoke with study author Mariya Davydenko of Carleton University regarding her research, A Meta-Analysis Of Financial Self-Control Strategies. “Psychology and finance are closely related,” Davydenko said, “and one of the biggest problems is that people don’t go to academic research for help; they go to Google.”

Davydenko found the most widely-offered financial advice for those looking to cut costs was some combination of coupon-cutting and savvy shopping, which appeared in more financial self-control strategy web site articles than any other. Yet these strategies have the opposite effect, increasing spending substantially. Coupons lead to impulse buying, overspending on items not needed, and coupon stockpiling. In short, looking for sales, bargains, and using coupons doesn’t reduce spending, it increases it.

There are two methods to combat spending that actually work, to varying degrees: proactive and reactive. Proactive strategies are significantly more effective because they prevent spending through avoidance and planning tactics. Reactive strategies are more difficult because they require self-discipline in the face of temptation, but are better than nothing! Here are the eight best self-control strategies to help you reduce spending, both to bee proactive and to take measures when faced with temptation:

Proactive Strategies

• Have Goals: Setting specific, measurable, and achievable goals makes it easier to prioritize spending and allows you to track your progress. Studies have shown that individuals who set specific goals are more likely to achieve them. This strategy can be augmented by adding a visual goal: Picture yourself in the future having achieved this goal.
• Budget: Creating a budget requires that you understand where your money is going and helps you identify areas where you might be able to cut back. An effective budget can help you achieve financial goals just through the process of making one. In fact, 85% of people who make a budget say it helped them get out or stay out of debt, according to Debt.com. Budgeting gives you a clear picture of your spending habits and helps you make informed decisions about where to allocate your money.
• Make a List: Before shopping, make a list and stick to it. Studies have shown this helps avoid impulse purchases by focusing on the things you need and avoiding nonessentials. Not on the list? Not in your cart.
• Track Your Spending: Keep track of your spending by writing down everything you spend money on. This will supplement you budget work and help identify areas you may be overspending. The clearer your picture of your spending habits the better you will be able to adjust.

Reactive Strategies

• Use Cash: Many studies have shown that using only cash for purchases reduces spending. Using cash limits available funds for spending: If you don’t have it, you can’t spend it. This strategy can become more effective by keeping money only in large bills (making them more difficult to spend) as well as making the money physically difficult to access.
• Avoid Temptation: People are more likely to make impulse purchases when they are exposed to tempting products. To avoid the triggers that can lead to impulse buying and overspending:
• Avoid shopping in stores that you know will tempt you to buy things you don’t need.
• Unsubscribe from emails from retailers, including coupon providers. Coupons and discounts can create a sense of urgency to make a purchase and make it more difficult to stick to a budget or spending plan.
• Unfollow accounts on social media that post about products and services you don’t need.
• Get An “Accountabilibuddy”: Find a friend or family member who will hold you accountable for your spending. “People need to talk about money more often; with their friends, their family, and with professionals,” says Davydenko. Share your budget with them and ask them to check in on you to make sure you’re sticking to it. Talk to your kids about your income and your spending and you can improve their financial literacy at the same time.
• Wait It Out: If you see something you want but don’t need, wait a day or two before buying it. This will give you time to think about whether you really need it and if it’s worth the money. You’ll think more critically about your purchases and, in time, avoid impulsive buying.

Big Decisions Have Big Consequences

“What really surprised me (when I was researching for) this paper,” said Davydenko, “was just how many horrible strategies are out there. It’s not about foregoing Starbucks and making coffee at home. You might feel like you’re making progress, but it’s insignificant relative to big expenses.” Buying the house you need rather than the house you want, moving to a less expensive city, and looking at other big expenses has a major impact on your overall financial well-being. A big wedding can end up becoming a big nightmare quickly as costs escalate.

For example, consider that the average wedding was about $28,000 in 2021 according to the Knot. That’s equivalent to almost nine fully-paid domestic vacations for two. Is the wedding more important than making memories with your spouse? Or future college expenses for children? Ensure that you are prioritizing correctly relative to your own goals, your income, and other resources so that you can live the life you want not just today, but in the future.

You might be wondering what happened to Emma. She worked for years to reign in spending using a detailed plan with clear goals, created a budget, and monitored her spending through regular meetings. I was lucky enough to be her “accountabilibuddy.” She took her first vacation in years in 2022 and today has a small but growing retirement savings account.