142 | What to Do When You Overspend

Let’s talk about a common problem for lawyers and non-lawyers alike: overspending.

The default for many people is to beat themselves up when they overspend and make it mean all kinds of negative things about themselves and their ability to manage their money. But it doesn’t have to be that way.

In this episode, let’s talk about the three steps I recommend you take when you overspend.

• the importance of having a budget
• how to measure overspending
• the mistaken belief that leads people to give up when they overspend
• the effect of beating yourself up for your mistakes
• three steps to take when you overspend

Episode 140: Money Check-Ins

Episode 80: The Power of Evaluating Your Efforts

If you’re ready to learn the mindset and strategies to master your money, let’s schedule a call.

You’re listening to Wealthyesque. We are a community of lawyers who believe that true wealth is having control of our time. I’m Rho Thomas, and as a busy wife, mom and former Biglaw associate, I know all too well the tension between the culture of the legal profession and pretty much everything else you want to do in life. That’s why each week, I’m bringing you the information and tools you need to improve your money mindset and manage your money to create true wealth. Because ultimately, it’s not about the money. It’s about the freedom and flexibility the money affords.

Hey friend. Welcome back to the show. I hope you’re doing well and having an amazing day so far. Today we are talking about what to do when you overspend. This is one of the most common issues I see with my clients and I want to address it because I think it’s a common issue for people at large. Before we dive in, though, let’s talk about the importance of having a budget. Your budget is your plan for how you’re going to use your money in a given time period. Most often a time period is a month, right? So how you’re going to use your money in a month. And that includes what you’re gonna spend on and how much you’re going to spend, how much you’re gonna tithe to your church or give to charity, how much you’re gonna save how much debt you’re gonna pay off, all that kind of stuff. And so often people think about budgeting as this bad thing that makes them feel deprived. How many times have you heard people say things like, I can’t go out to eat because I’m on a budget, or I can’t go shopping because I’m on a budget or maybe even said some of those things yourself. But the thing is, the point of having a budget is not to tell you what you can’t spend on and what you can’t have. The point is for you to intentionally decide how you’re going to use your money rather than looking at the end of the month and seeing how much you spent and wishing you’ve done things differently. That’s it that’s the only point of a budget. And when you make those intentional choices with your money, you naturally spend less on things that you don’t care about and have more available for the things you do care about including your goals like saving or paying off debt. That’s why budgeting is so important. You work hard for your money. So let’s make sure you’re using it how you want to use it and not letting it slip through your fingers. So with that understanding, let’s talk about overspending because you can’t overspend if you don’t have a plan for how much you’re going to spend in the first place. Right. Overspending requires a desired amount that you want to spend that you’re measuring from to determine whether you’ve overspent. We have to know how much you wanted to spend before we can determine that you’ve overspent. So that means if you’re out here telling yourself that you overspend on XYZ or you spend too much on this or that, but you only have a vague idea of how much you think you spend on XYZ, and you never determine how much you wanted to spend on XYZ, then you cannot be overspending. Right? So you can stop telling yourself that now, but let’s say that you’ve been listening to me for a while and you’ve created a budget for this month. And you’ve mapped out a plan for how much you’re gonna spend in each category and how much you’re gonna save and all that. And let’s say that you’re going through the month and we’re like, halfway through, right, but you’ve already spent more going out to eat than you want it to this month. A lot of times when that happens, people want to just give up, it’s like I’m never gonna get the hang of this. I might as well give up. I might as well stop trying. There’s no use. There’s no point I suck at this. And that line of thinking comes from the mistaken belief that you should be able to just do all the things perfectly and if you can’t, then you shouldn’t do them at all. But you’re gonna make mistakes. With your money specifically, you’re gonna go over budget, sometimes it’s inevitable, especially if you’re not used to budgeting and managing your money in an intentional way. With so many lawyers, when they overspend, beat themselves up and tell themselves that they’re a failure and they suck and I’ll never get the hang of it. And when you start down that road, then it’s like, well, I’m already here. I already spent too much so I might as well just keep going and buy whatever I want. Forget the budget. I’ll get back on it next month. And so what could have been a one time mistake ends up being a completely blown budget, and you’re completely off track on where you wanted to be with your finances at the end of the month. But it’s all because of the way that you talk to yourself after the mistake and the way that you beat yourself up about it. Instead of it just being a single mistake. You make it something about who you are as a person and how you failed. You’re never gonna get the hang of it, and that feels terrible. And then of course, it leads you to just avoid your finances altogether. Instead, what I want you to do is give yourself some grace. Recognize that we all make mistakes. I just sent an email and posted on social media about my own mistakes with my finances recently, where I still go over budget sometimes. I still have times where I don’t spend the way I want to I spend more than I want to and that’s okay, it happens but we don’t have to make it more than it is. Next. I want you to figure out why you overspent. So let’s look at why it happened. What was going on at the time what contributed to you overspending How are you feeling? Right? Look at what happened. And then when you understand what happened, why it happened. I want you to make a plan to keep yourself on track next time. So what’s the strategy, things that lead to overspending? How can you benefit from a great example of this was one of my clients found himself spending more than he wanted to at restaurants and bars. And when we looked at what was happening he wasn’t regularly checking in with how much you wanted to spend going out for the month. And he wasn’t deciding how much he was going to spend each weekend. Knowing that that was what was happening, that those things were what were causing him to overspend. He decided to start doing his money check ins which we just talked about in episode 140. But he decided to start doing those check ins on Fridays. So then he knew exactly where he was in that category going into the weekend, which is when he mostly was going out. But then he also decided to divide the amount he wants to spend on going out each month by the number of weekends in that month to give himself a rough estimate of how much he could spend each weekend without going over budget. And once he put that strategy in place. He stopped overspending with restaurants and bars and he was able to make sure that he was keeping himself on track. When you know why you overspent then you can make a plan for how to handle it next time. When you know that your go to is online shopping for example, if you’re feeling bad after a bad day at work, maybe you decide that you’re gonna delete your payment info out of your online account. So it’s not so easy for you to shop when you’re feeling bad, and you might identify something else that you’re gonna do like taking a walk when you’re feeling bad. So you’re redirecting yourself from that typical habit that you have. That’s leading you to overspending. But when you don’t understand why it happened, you can’t make those kinds of strategies for yourself. So you don’t know how to handle it going forward and you default to the same thing, right? You This is also where evaluations come in. We’ve talked about that before. As well, where you want to evaluate what happened in the course of your month and decide what went well here. what didn’t go so well and what do I want to do differently going into the next month. Doing those evaluations allows you to look objectively at what happened in the month and you can create a plan for what you’re gonna do next month to keep yourself on track. But it’s hard to do that when you beat yourself up and make it a problem with you as a person and that you just can’t manage your money and you will never get the hang of it and all that kind of stuff. Stay away from that. Like that’s how you end up going further off track than you would have been. One mistake doesn’t have to mean that you’re a failure and you should just give up. Going all the way there is a recipe for ensuring your failure because you don’t get the opportunity to learn from it. I love that quote that says you’re always either winning or learning in the context of your finances. You’re either hitting your goal or you’re learning about what doesn’t get you to that goal and you can refine your strategy but it all starts with taking that objective look at what happened so that you can make a plan going forward to course correct. Alright, so those are the steps to take when you overspend. Give yourself some grace, understand why it happened and then create your plan for what you’re going to do going forward and make sure it doesn’t happen again. We don’t have to shame and blame and beat ourselves up about it. And truth be told it probably will happen again at some point or another and that’s okay, right. None of the shame and blame and all of that is productive that often leads to more overspending, but if we can take a step back, take that objective look at what happened. Get curious about what happened, understand what happened, and then make a plan to move forward then you can prevent yourself from going even further off track than you already are. And listen, if you find yourself overspending a lot of the time we should definitely talk I can help you manage your money in such a way that you spend less than you make as the norm. So just head to rho thomas.com/call and schedule your consultation. All right, that is it for this week’s episode. Connect with me on social media. You can find me on LinkedIn rho, Thomas and Instagram, I am rho Thomas. Subscribe to the show and leave a rating and review if you haven’t already. And if you don’t know how to do that, if you have an iPhone and the apple podcast app, you click on my podcast, scroll down past episodes and there’s a section for ratings and reviews and you can tap how many stars you want to rate the show and then you can also leave a few words about what you think of the show. And I’ve been hovering at 90 something for a while now. I would love to get to 100 ratings. So if you would do that for me, I would greatly appreciate it. Plus more ratings and reviews really do attract more listeners to the show. And finally, share this episode with a friend or two who you think would find this information useful. I want to get it into the hands of all the lawyers out there because I know that when we manage our money better we’re able to change our lives. As we close out friends, I pray that you take the information you’ve learned here, apply it in your life and open up to the realization that wealth is available to you. As you do that consistently. Week after week. You’ll continue to take steps to regain control of your time, build wealth and live the life of freedom and choice you deserve. Talk to you later.