3 Steps to Stop Repeated Cycles of Overspending and How to Overcome Them

I want to share some tips today – three steps to stop repeated cycles of overspending and how to overcome them. Now this has come off the back off the Plug Your Money Leaks challenge that I’ve been running this week, but also with some conversations with a few people this week about food overspend. So I thought that I would take this particular food overspend cycle and just talk through the three steps that I believe would be really useful for you to think about how you can stop this repeating cycle of overspend.

If food isn’t the overspend area for you, which it is for many people, this can be applied in any area. One of the reasons why people get into these repeated cycles, and we often see this with millionaires for example, or people who win the lottery, is that they win an exceptional amount of money and what happens is because their behaviours and habits have remained unchanged, they could end up in this repeated cycle of overspend and then actually end up spending that money very, very quickly.

1. Identify the Issue – Look backwards before you can look forwards

The first step is to really identify the issue. It may be easy for you to say; “Well, I’m overspending on food.” But that isn’t actually the issue. The issue is the underlying emotional reason that’s actually driving that behaviour in the first place.

So, for example, most people who have a repeated cycle of overspend, this will be because they’re being driven by some kind of emotion, whether that’s stress, whether that’s fear, whether that’s anxiety, whether it’s a sense of not feeling worthy enough, and I’ll give you an example of how this plays out.

I had a conversation this week with a lady, and her area of overspend was food. When I actually went underneath the bonnet of why she was doing that, it was because she felt like she wanted to treat herself and her children because she grew up living a very frugal life as a child. Just having enough money to pay for things, and sometimes not having enough money for things. So what that taught her is that she didn’t want to give that to her children; she wanted to be able to give her children everything that they need. And so therefore, the cycle there for her was that food was being used in an attempt to give her children what she didn’t have.

This is really common. Often we try and give our families, our children, and ourselves a life that we maybe didn’t have ourselves.

So therefore she identified that quite easily that she was overspending in the area of food. And when I asked her how much she was specifically spending, she said approximately maybe £800 to £1000 a month. And she was spending on her credit card because she gets reward points, and again I see this happening on many occasions But what was happening there is that she had the awareness that she was overspending on food, but she wasn’t very specific in that awareness. So one of the things that I gave her to take away to go and do was to get real clarity and awareness on what actually is that overspend.

I want to share some tips today about three steps to stop repeated cycles of overspending and how to overcome them. Now this has come off the back off the Plug Your Money Leaks challenge that I've been running this week, but also with some conversations with a few people this week about food overspend.

There’s a few reasons for it being beneficial to do this. One is that when you have that awareness it empowers you – it puts the power back into your hands to enable you to then get on to step number two.

So if you’re sitting there thinking I do have another spend issue, but I don’t know exactly what that issue looks like, you’ll probably surprise yourself. Sometimes it could be a positive surprise. Sometimes we think “My Goodness, I’m spending £800- £1000 a month for food”, but maybe it’s not quite as much as you thought. Or maybe it’s actually more than you think it is, but that’s okay.

Put some positive music on and just see this as an exercise to do to create that awareness for yourself, to put the power back in your hands.

I said to her,

“How would you feel if you had that power back in your hands?”

She replied,

“Well, I’d be more in control”

So I asked,

“How would that play out for you?”

And she said,

“Well, I’d be more in control so maybe I’ll start paying a bit more of my credit cards off, and I would try to then get out of that cycle”.

So she knows the solution, it’s just actually getting a little bit underneath the bonnet of what’s going on there, of what’s that awareness that’s needed in order to identify what the overspend issue is on? What’s also very useful is if you can identify the emotion behind it in the first place. That’s a double whammy. So if, for example, you know that when you’re feeling stressed, maybe it’s on the way home from work and you feel stressed at work. You always go home via M&S, for example, you go with all good intentions to buy one pint of milk and you end up with £40 worth of stuff in your basket.

It is really common. And if you can identify that trigger, then you can reverse that by doing something different. That might be taking a different route home. So maybe you don’t drive past Marks and Spencer, or you don’t walk past.

2. Identify ‘The One’

Once you’ve identified and looked back at some of the emotional triggers, or really looked back at what you’re actually spending, then step number two is to look at what would be the next best step. You have this information in your hands, what are you going to do with that? So, for example, if you’re spending £1000 on food and you want to spend £800, and you you think that’s a realistic goal for you to have. That’’s £200 per month you’re saving, so where are you going to put that now? The reason that step is really important is because you want to be able to visualise and think ahead.

3. ‘The Next Right Thing’ – Reward Yourself!

What’s the reward going to pay at the end of saving that £200 per month? That £200 a month could be put into a foundations pot so that you could start building an emergency fund.

That £200 a month could be put into a personal development pot. That £200 a month could be put into a treat pot for the children so that rather than treating them with food, you could maybe treat them in another way. Maybe put it into an investment for their financial future. So rather than worrying about their financial future, you could start making some changes. Maybe it’s that you could be redirecting that to pay off some of those credit cards to get those debt paid off quicker.

There’s got to be a reward at the end of it, and you’ve got to have that momentum. A lot of people say “I plan to do these things. I have all good intentions, but it never happens”. The likelihood is that’s because you’re not following these three steps.