If you recently found yourself spending more than you intended, perhaps due to a friend’s wedding celebration or splurging on a vacation rental outside your budget, you’re not alone. A recent study by CIBC revealed that over half of Canadians tend to spend the most during the summer, whether on travel, dining out, or entertainment. Additionally, with the rising cost of living, 74% of Canadians are finding it increasingly challenging to save money.
Experiencing financial overindulgence can lead to stress and anxiety when the bills come due. To bounce back, we sought advice from two experts on how to address a financial hangover and prevent overspending in the future.
Recognize and Analyze Your Emotions
When faced with overspending, it’s common to feel shame and anxiety. However, financial wellness advocate and certified financial planner Shaun Maslyk advises against self-criticism and emphasizes understanding and learning from your financial choices. Identifying the emotions driving your spending habits is crucial, as spending can sometimes be a way to deal with underlying emotions like fear, greed, or stress.
Bourree Lam, a journalist at the Wall Street Journal, suggests an exercise called “How to YOLO responsibly” from her book, encouraging individuals to track impulse purchases and assess their long-term impact.
Recover Financially
After introspection on your overspending triggers, creating a debt repayment plan is essential for regaining financial stability. Maslyk recommends reviewing expenses to find areas to cut back without feeling excessively deprived. Lam advises prioritizing paying off high-interest debts first and adjusting savings goals accordingly.
Establish Financial Goals
Setting clear financial goals is key to avoiding future regrets. By aligning spending with personal values and focusing on long-term objectives, individuals can resist impulsive purchases and stay on track.
Avoid Triggers and Practice Thoughtful Spending
Identifying and minimizing triggers that lead to impulse buying is crucial. Lam suggests strategies like avoiding specific shopping environments and pausing before major purchases to prevent emotional spending. By aligning spending with personal values, the urge to overspend can be reduced.