Overspending: how to stop and avoid debt

Posted on 11 June 2024

Written by Ashvin Sharma

In today’s fast-paced world, managing your personal finances can be a challenging task. Overspending is a common issue that many Canadians face, and it can often lead to debt and financial stress. Perhaps you’re guilty of buying things you don’t need, or are partial to impulse buying. Although it’s nice to treat ourselves occasionally for an instant reward, making this a habit can lead to overspending. Overspending, in turn, can quickly spiral into poor financial management and debt. At Spergel, we understand the importance of financial health and want to help you take control of your spending habits. By learning how to identify your spending triggers, you can take control over your finances and make some positive financial changes, including goal setting and budget creation. In this article, we share some practical tips to stop overspending and avoid falling into debt.

What are the key causes of overspending?

Before we dig into how to stop overspending, it’s key to understand why we overspend. With the ease of making purchases online, it’s only ever getting easier to spend money quickly and conveniently. According to recent data shared by Statista, 36% of Canadians said they were more likely to impulse buy online. Here are some of the most common causes of overspending:

  • Impulse buying – making spontaneous purchases without considering the long-term impact on your finances.
  • Emotional spending – buying things to cope with emotions such as stress, boredom, or sadness.
  • Social pressure – feeling the need to keep up with friends, family, or societal expectations. Read Mia’s success story, a new mom who was facing the challenges of maintaining a social life on a limited budget during her maternity leave. Determined not to lose her connection with friends, she worked with Spergel to receive credit counselling and guidance on developing a social life within her means.
  • Not tracking your spending – not tracking where you spend your hard-earned money often leads to debt. Money in. Money out. If you don’t know where the money is going, how can you budget effectively? Tracking spending is critical to overall financial health.
  • A lack of budgeting – not having a clear plan for how to allocate your income can lead to uncontrolled spending. And conversely, not tracking your spend can lead to an unrealistic budget.
  • Buying sales – sales can encourage many people to overspend. Most of us are drawn in by discounts and enjoy the adrenaline of snagging a good deal. If it’s not a purchase you’d be considering if it were not in a sale, you should consider returning it to avoid buyer’s remorse.

How to stop overspending

Now that we understand the factors that can influence buying decisions and overspending, here are some strategies we suggest implementing to break bad habits and get on the pathway to better financial management and control.

Track your spend

Money in. Money out. But where does the money go? Those stops at the convenience store, the coffee and teas, quick snacks, they all add up and if you’re not realistic with your monthly spend, how can you balance the budget? Your first goal should be to create a quick spend tracker. This could be a spiral-bound notebook you carry on your person and note every dollar spent. Maybe it’s an online app you use to track. Maybe it’s an envelope you throw receipts into, whatever it is, just keep track.

Create a budget

The first step to stop overspending is to track your income and expenses. Do so for a month, listing all income sources and any expenditure you make. This will give you a clear picture of where exactly your money is going, as well as any that may be left over. Once your tracking is in place, it’s now important to set yourself goals and a realistic spending limit for different categories – including groceries, rent, dining out, and entertainment. Take a look at our tips for budget creation, and there are also plenty of apps and tools available to help you create and stick to a budget, while also tracking your spend.

Recognize and avoid triggers for overspending

A key requirement to stopping overspending is being able to identify and avoid the triggers that encourage you to spend. It could be feeling down or bored – whatever it is, identify the situations or emotions that lead to overspending and find healthier ways to cope, like exercising or speaking to a friend. You should also work to avoid any temptations that encourage you to make unnecessary purchases. This might be a certain place, like the mall, or a website where you’re tempted to make impulse purchases. Another good practice is unsubscribing from marketing emails and unfollowing brands on social media.

Practise mindful spending

It’s always a good idea to have second thoughts before making a purchase. You might want to implement a waiting period before buying, too – this gives you the necessary time to consider if you truly need an item or not. Before you buy anything, make sure to evaluate your needs vs wants – is the purchase a need, or merely a want? You should only focus on buying what you genuinely need.

Use cash instead of credit

Did you know that you’re twice as likely to spend money on a credit card than when spending cash? By limiting your credit card use and instead using cash or a debit card to make everyday purchases, you can avoid the temptation of spending money that you simply don’t have. If you do need to use a credit card, you can set up alerts to let you know when you’re approaching your credit limit.

Plan for large purchases

If you have an expensive purchase to make on the horizon, it’s always a good idea to save in advance. By saving over time instead of buying on credit, you can avoid debt and often you’ll appreciate the purchase more. Take the time to research and compare prices before making a large purchase to ensure you’re getting the best possible deal. Be a smarter shopper and shop the sales – you might be surprised at how much you can save.

Speak to a Licensed Insolvency Trustee

If you’re struggling with your overspending, and are quickly seeing it spiral into debt, an experienced Licensed Insolvency Trustee can help you to manage and reduce your debts, as well as creating a long-term financial plan and strategies for managing your finances more efficiently. Licensed Insolvency Trustees are the only professionals in Canada legally able to file all forms of debt relief, making them well placed to review your circumstances and advise you accordingly.

Overspending: FAQs

Here are some of the most common questions we receive around overspending:

How do I stop overspending?

To stop overspending, start by tracking your spend and creating a detailed budget that outlines your monthly income and expenses, prioritizing essential costs like housing, groceries, and utilities. Use budgeting apps or tools to track your spending in real-time and identify areas where you can cut back. Avoid impulse purchases by adopting the 24-hour rule: wait a day before buying non-essential items. Consider using cash instead of credit cards to control spending and minimize debt. Additionally, set clear financial goals, such as saving for emergencies or paying off debt, and review your progress regularly to stay motivated and accountable.

How can I reduce my expenses in Canada?

To reduce your expenses in Canada, begin by reviewing your monthly budget to identify non-essential expenses you can cut back on, such as dining out, entertainment subscriptions, and impulse purchases. Consider adopting cost-saving habits like cooking at home, using public transport or carpooling, and shopping for groceries with a list to avoid unnecessary items. Look for discounts and use loyalty programs to save on regular purchases. Additionally, consider refinancing loans to lower interest rates, switching to more affordable service providers for utilities and insurance, and selling unused items. Regularly review and adjust your budget to ensure you stay on track with your financial goals.

What is the 50/30/20 rule?

The 50/30/20 rule is a straightforward budgeting method that helps manage personal finances effectively by allocating your after-tax income into three categories: 50% for needs, 30% for wants, and 20% for savings and debt repayment. Needs include essential expenses like rent or mortgage, utilities, groceries, and transport. Wants cover discretionary spending such as dining out, entertainment, and vacations. The remaining 20% is dedicated to building savings, investing, and paying down debt. This rule provides a balanced approach to managing money, ensuring that essential expenses are covered, while also allowing room for discretionary spending and financial growth.

How do I manage my expenses in Canada?

To manage your expenses in Canada, start by understanding what you spend and where, then move on to creating a detailed budget that tracks your income and categorizes your spending into essentials, non-essentials, and savings. Use financial tools and apps to monitor your spending in real-time and ensure you stay within your budget. Prioritize paying off high-interest debt and setting aside an emergency fund. Look for ways to reduce costs, such as shopping for deals, cooking at home, and minimizing discretionary spending. Review and adjust your budget regularly to reflect any changes in your financial situation. Additionally, consider seeking advice from a Licensed Insolvency Trustee to optimize your financial strategies and achieve your long-term goals.

Overspending is a habit that can be difficult to break, but with the right strategies and mindset, you can take control of your finances and avoid debt. At Spergel, the ‘get rid of debt’ people, we’re committed to helping you achieve financial freedom. If you need more personalized advice, book a free consultation with one of our team of experts. Together, we can help you navigate your financial challenges and achieve lasting financial stability.

What to read next


Ashvin Sharma

Ashvin Sharma is a Chartered Insolvency and Restructuring Professional and LIT (Licensed Insolvency Trustee) overseeing all of Spergel's offices in the Greater Vancouver Area and British Columbia. He is also our resident expert on homeownership debt and health debt. In his spare time, Ashvin loves to play sports, spend time with family and friends, and serves as a volunteer coordinator for "Free-Them", a Canadian organization committed to raising awareness about human trafficking.

Schedule a Free Consultation with Ashvin Sharma (or your local Spergel LIT) by:

Phone 1-877-501-4321 (toll-free)

24/7 live chat (with a human) on our website

Facebook messenger

Email (hello@spergel.ca)

Online booking calendar

Be Debt Free. You Owe It to Yourself.

You may be interested in:

Helpful starting information:

What to Bring to an Appointment

To get the debt help that you need, please bring a list of who you owe and how much to each, a list of everything you own and your monthly household budget. Don’t have everything right away? Don’t worry – We will guide you through each step.

Download Form

Your Information

We’ll walk you through our application process. But, if you want to prepare for your debt free assessment consultation in advance, download our information form and fill in what you can.

Download Form

Calculate Your Debt Repayment Options

How can you compare your debt repayment options if you don’t know how much they will cost you? Your solution will become much clearer when you are able to compare costs.

Debt Calculator

Ready to Be Debt-Free?

If you’re ready to be debt free, it’s time to meet with one of our knowledgeable Licensed Insolvency Trustees at your convenience and get started

Meet with a trustee