Maybe you went overboard celebrating a friend’s wedding or splurged on a cottage rental that wasn’t in your budget — and now you’re not sure how you’re going to pay for it. You’re not alone. According to a recent CIBC poll, more than half of Canadians say they spend the most money in the summertime — whether it’s on travel, dining out or entertainment — and 74 per cent of Canadians are finding it harder than ever to save with the rising cost of living.
No matter when they happen, moments of financial overindulgence can leave us feeling stressed and overwhelmed when the bills come due. Ready to get back on track? We asked two experts for their top tips on dealing with a financial hangover and how to avoid overspending the next time you feel the urge to splurge.
Identify and reflect on your emotions
When you’ve gone over budget, either from a one-time purchase or a period of overspending, there might be real feelings of shame and anxiety in the aftermath. But it’s more productive to have compassion for yourself and focus on understanding your financial decisions — and learning from them.
“Don’t beat yourself up because that … just makes it worse, and we avoid our debts,” said Shaun Maslyk, a financial wellness advocate and certified financial planner. “So if we are trying to pay off some debts from that Jamaica trip or whatever it was, I think it’s first accepting and acknowledging that, ‘Hey, I have debt, and I’m not bad for doing that.'”
Identifying the emotions behind your financial indulgences is an important step in dealing with them. Our spending can be a way to try to cope with an uncomfortable feeling, said Maslyk. “We are emotional creatures, and spending money does feel good at times. We get this endorphin rush.”
Maslyk notes that the most common emotions driving overspending are fear, greed and stress.
Perhaps loneliness or guilt during the holidays pushes you to overspend on gifts, or you get caught up in social comparisons after too much time on social media and go into debt to keep up with friends and acquaintances.
“You can’t take those emotions out, but we can start to recognize them,” said Maslyk. “If I feel stressed and I go buy something … [I can ask myself,] ‘Why am I doing that? What vice am I trying to fill?’ Because often we use our expenses and we use money as a way to satisfy an underlying need that we just haven’t recognized yet.”
Bourree Lam, a journalist at the Wall Street Journal and co-author of The New Rules of Money, suggests trying an exercise from her book called “How to YOLO responsibly,” which involves writing down all the impulse purchases you make and then checking back in with yourself in six months to see if that short-term decision was, in the long term, a good one. “And then you can learn something about yourself,” said Lam. “It’s not about buying less. It’s about learning whether your impulses match up with your long-term decision.”
Repair your finances
Once you’ve given some thought to the reasons you overspent, having a plan for paying off the debt will help you feel better and more confident in your abilities, said Maslyk. He suggests starting with a review of your expenses to see if you can free up some funds — but cautions against doing a “massive renovation” of your budget or creating a plan that leaves you feeling so deprived that you won’t stick to it.
Lam recommends being strategic about your debt-repayment approach. “Whatever your recovery involves, pay off your high-interest debt first,” she said. If your spending is spread out over multiple credit cards, for example, prioritize paying off the card with the highest interest rate. It’s OK if you need to pause or adjust your savings goals temporarily, said Lam: “Pay down debt first.”
Set goals
Lam and Maslyk both emphasize the importance of goal-setting to prevent future financial regrets. Maslyk suggests asking yourself, “What do I want to use my money for?” The answer will help you gain clarity, avoid temptation and better align your spending with your values.
“If we don’t know what we want, we’re just going to bounce around and want what other people have, because we feel less than,” said Maslyk.
“Having one touchstone goal that you can turn to whenever you’re getting triggered to spend is really helpful,” said Lam, “because then you can think about that goal and it gives you something else to focus on.” Whether it’s paying down your student loans, putting away money for retirement or saving up for a house or car, identifying a goal can help you stay on track.
Avoid triggers and think before you buy
We all buy things we don’t need. But if your goal is to cut down on financial regrets in the future, try to identify the triggers that spark impulse buys or emotional spending and then make a plan to minimize them in your life, said Lam.
Maybe you need to move your midday walk to a park instead of strolling past stores so you can decompress without breaking out your wallet. Or, if you notice that you tend to buy things online when you’re bored, you could consider blocking your go-to shopping websites.
“Targeted ads are very triggering for me,” said Lam. “So I quit Instagram for 12 months. I found that my purchases were a lot more intentional, and I was much more able to have a mindfulness around buying things.”
To further rein in overspending, Maslyk recommends pausing briefly before you make any major purchases. When we’re overstimulated and our emotions are driving us to buy this or that, walking away and taking a moment to reflect can help.
“That’s part of having a financial life again,” said Lam. “You have to keep on checking on it. People compare it to gardening. You have to just constantly check on your status — ‘How am I doing financially?’ — and adjust as you need.”
The more our spending lines up with our values, she adds, “the less tempted we are to want to go and buy [something like] a country cottage.”