Oops… we greatly over spent on our kitchen remodel.
Initially planning to just knock down a non load bearing wall in between our kitchen and dining room, turned into a full fledged kitchen remodel. And as a personal finance writer, I am here to tell you we overspent on the project… just a little
The wall that was supposed to be free to knock down, actually turned into a $1,600 remodel project. While remodeling our kitchen was not what we had planned, the kitchen project sort of just escalated, similar to how most over spending occurs.
Just like how some…
- Vacations never meet the budget.
- Weddings end up costing a fortune.
- Small home projects turn into kitchen remodels.
- Car repairs turn into new cars.
- And so on.
All of the above I can say I am personally guilty of, but at this point I can only imagine… but you might be shaking your head in agreement. We all make poor spending decisions from time to time, but over spending is becoming more and more of an issue for American adults, especially millennials.
A recent USA Today news article showed that Americans “Nonessential” spending is out of control, spending a whooping $18,000 per year.
Just see the chart below:
|Takeout or delivery||$177.08|
|TV & online streaming services||$23.09|
While going way overboard on a kitchen remodel wasn’t on the list, $18,000 in overspending is a lot of money.
Some of the above spending may be deemed as “Necessary spending” and there is nothing wrong with grabbing a bite to eat out at lunch, but spending $700 or more each month on drinks and food is over spending – no matter how much you make.
Simply reducing the numbers in half is an extra $9,000 per year to pay towards your future. So if overspending is getting out of control, how do you stop overspending?
1. Set a budget for spending categories
A Gallup poll infamously published results showing that only 1 in 3 adults use a household budget. So while some might say they have a spending problem, it might really just boil down to a budgeting problem.
But is budgeting really that important?
According to Forbes, in early 2019 it was estimated that 78% of adult workers were living paycheck to paycheck. On top of living paycheck to paycheck, according to Friedman,
“More than 1 in 4 workers do not set aside any savings each month.”
So in other words, not only were most adults not saving, they were overspending…clearly. Simply starting a budget and beginning to understand your spending habits is essential to stop overspending.
Think about it, how can you take control of your spending if you are not even aware of your spending problem in the first place?
2. Identify high spending areas
Once you start a budget you will quickly be aware of your high over spending areas.
Sort of like when you go to the dealership and look at a car you really like, then all of a sudden you see it everywhere – money works the same way. Bringing attention to your high spending areas will help you take control of your spending.
For example, if you’re the person from above who is spending $350 per month on delivery and lunch, chances are you were not even aware of this (If you were see #9 below). Now that you are aware you have identified a weak spot or a gap.
Knowing what to avoid and where you spend most of your money will help you stop overspending in those areas.
3. Know your weak spots
A key to stop overspending is to identify your spending triggers.
If you know everyday at 3:00 you feel a little tired, which means you walk to the vending machine and buy a soda, come up with a solution. Or maybe you go grocery shopping after work before dinner – when you’re starving – and you buy more food then you should.