3 Ways to Stop Spending More Than You Earn

By Markets Fool.com


The hypnotic gaze of the empty shopping cart. Photo credit: Nino Barbieri. Source: Wikimedia Commons.

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Spending less than you earn is easier said than done. You might implement budgets, set up auto-debits, and carry cash, but all of those tactics address the mechanics of spending without tackling the bigger picture. If you're really looking for help living within your means, try out these three psychology-friendly strategies instead.

Delay, delay, delay
One of the best ways to avoid a bad decision is to wait on it. Want to sign on the dotted line for that new car? Leave the dealership and sleep on it. Dying to say yes to that fancy dinner reservation? Take a walk and think about it again in 30 minutes.

Delaying your decision-making can help you step out of the stress of the moment and see the bigger picture more clearly. It's so effective that even Stephen Schwarzman, chairman of the Blackstone Group, a private equity firm, recommends it. In a story for the Harvard Business Review, he explains how his high school track coach referred to the team's bitter winter training sessions as "making deposits." Schwarzmann says that lesson found an obvious parallel on Wall Street, where, "It wasn't sufficient to make some deposits; I had to be certain that the deposits would cover any withdrawal 100%." He says:

Today, whenever I'm under pressure to make a decision on a transaction but I don't know what the right one is, I try desperately to postpone it. I'll insist on more information -- on doing extra laps around the intellectual parking lot -- before committing.

Use cash, or cancel your overdraft
Of course, you don't want to spend all your time thinking through each transaction you make. While it's useful to sleep on big purchases, you generally want to be able to decide about buying lunch or a coffee in the moment.

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To take the risk out of these budgeting decisions, carry cash. Only cash. You'll very quickly know if you're "allowed" to buy that coffee or not by seeing the number of bills in your wallet. For a card-carrying alternative, open a checking account solely for discretionary purchases and cancel the overdraft. This will quickly force you to keep an eye on the balance, and it's a lot easier than thinking through how much money you have left.

I personally find it helps to make that money as inconvenient to supplement as possible by using a different bank altogether, but some might consider that a bit extreme. It's all about what works best for you, of course, but for complete simplicity, having a hard number to stick with and no means of fortifying it (unless it's really important) can be really helpful.

Find ways to earn more
Of course, living within your means is a lot simpler if you can earn more. If your budget is operating on razor-thin margins, this will be even more powerful. After all, you can only cut so much -- at the end of the day, all of us have our baseline standard of living we'd like to meet.

So, consider earning more instead. These days, you have countless options: a part-time job, a consulting gig, an online business, maybe some tutoring. Even a garage sale can help you kick-start the process.

The important thing is to take that extra income and use it wisely -- you've defeated the purpose if you let it slip through your fingers without a second thought. But the beauty of income is that you can keep finding ways to raise it, making it easier to stay within budget but also a lot less stressful.

The article 3 Ways to Stop Spending More Than You Earn originally appeared on Fool.com.

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