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I’m a Money Coach: Here’s How to Stop Overspending and Build Healthy Money Habits

Whether it's an unexpected event or high-stress job, it's best to figure out what triggers you to spend.

Millions of Americans have a problem with overspending. And even though it’s not an easy cycle to break, most personal finance advice doesn’t focus on why we make certain financial choices. 

As a personal finance coach and CNET Money expert, I’ve worked with thousands of people looking to change their financial habits. And one thing is clear -- knowing how to make healthy financial choices isn’t always enough to overcome the way we think about money. Our relationship to money is largely driven by our past and current circumstances. And sometimes that can lead to a downward spiral of debt and impulse decisions. 

However, adopting a better money mindset and creating healthy spending habits is possible. Here’s how.

Figure out your ‘bad’ money triggers

Before you can fix any money habits you want to correct -- impulse buying, not budgeting, avoiding debt and so on, you need to know what’s driving these triggers. I like to run my clients through a quick exercise using the HALTS acronym. If you’re experiencing one of the HALTS emotions, you’re more likely to spend money with less control.

HALTS stands for:

  • Hungry
  • Angry or anxious
  • Lonely
  • Tired
  • Sad or stressed

For example, you might order takeout frequently if you come home from work feeling stressed or overwhelmed. If you’re sad or stressed, you might indulge in retail therapy to lift your spirits. And since shopping can actually help improve your mood, it can be hard to overcome this urge. Retail therapy can make you feel better quickly and minimize lingering sadness, according to a 2014 study from the Journal of Consumer Psychology.

Unreined spending can satisfy the need for excitement and power, said Jonathan Friedman, PsyD, clinical psychologist at Baker Street Behavioral Health. But it’s particularly dangerous when it becomes compulsive and used as a means to solve a bigger problem, Friedman added.

But using shopping as a means to cope won’t improve your underlying issues -- and it could lead to financial distress. 

I’ve watched many people book extravagant vacations because they’re run down or stressed. The solution comes with a high price tag and usually includes intense days of activities, as well as travel stress. Then, when they return home, they’re even more exhausted than they felt before taking time off. And they might even be in credit card debt or have depleted their savings to take this trip.

“The benefits of shopping as an emotional band-aid can be helpful but in and of themselves are wholly insufficient to help a person heal (or grow) on a deeper and lasting level,” said Friedman. 

Rewire your spending triggers

Changing your spending habits can be difficult, but it is possible. I recommend writing out what caused you to spend money and thinking about what you wanted to get from that purchase. Instead of booking a hectic vacation to cure your stress, for example, taking a week off to rejuvenate and focus on your mental health might be a better -- and more affordable -- option. 

Think through low- or no-cost solutions you can apply when you’re triggered to spend money. If you’re overwhelmed, consider taking a break and going for a walk. If you’re tired or anxious, consider reading a book, watching a movie or eliminating screen time for a night. 

And if there’s a purchase you’re tempted by, sit on the decision for 24 hours. Let the item sit in your cart and sleep on the decision. After 24 hours, you’re more likely to have cooled down from your emotions. Then you can evaluate whether you need to spend the money and whether it fits your overall money goals.

You can also take steps to limit your exposure to triggers. Consider the last time you made a purchase you didn’t need. Were you influenced by an ad, email, an influencer or a friend sharing the product online? Reduce the temptation to indulge in that spending trigger by cutting back on how much time you spend on social media. Unfollow influencers who frequently encourage you to maintain an unsustainable lifestyle and unsubscribe from mailing lists that trigger you to overspend. You may also want to remove any saved credit card numbers on your phone or web browser.  

Lean on friends to help you stay accountable

Changing your habits can be difficult. It requires practice, and you’re bound to slip occasionally. That’s OK. As long as you keep trying, you’ll slowly get better at improving your relationship with money. If you need help, reach out to a friend or money coach to help you stay accountable.

If social media triggers you to spend excessively, start following personal finance experts like me, who encourage you to avoid overspending and can provide tips to better reach your financial goal. Two of my favorite financial experts are Carmen A. Perez from Make Real Cents and Jamila Souffran from Journey to Launch.

Don’t be afraid to ask for help

You may need more professional help to overcome your spending triggers. If you’re going through a difficult situation, you may not be able to manage your triggers alone. For example, you may be struggling with:

  • A very high-stress job or a toxic workplace
  • An unexpected health event
  • A divorce, separation or breakup
  • Moving to a new geographic location
  • Caring for a family member
  • A new baby
  • Depression, anxiety or another mental health condition

Give yourself grace in these situations and find someone you can talk to -- a therapist, trusted friend or family member -- as you navigate the situation.

Don’t expect healthy money habits to come overnight

You won’t be able to rewire the way you think about money overnight. Stick with the process, allow yourself to make mistakes and learn along the way. Over time, identifying your overspending triggers will help you find better solutions, and soon, you’ll begin to view money as a tool for financial freedom instead of a band-aid for temporary negative emotions. 

Shang Saavedra is the founder and CEO of Save My Cents, a personal finance education platform that helps Americans learn how mental health and financial wealth are connected, and how to use the power of an abundance mindset to unlock more wealth. Shang finished saving for her retirement by the age of 31, and now lives a work optional life in Southern California with her husband, two boys, and two cats. She teaches Americans the key habits and behaviors needed to become less fearful of money, and how to live life with joy. Her insights have been published by numerous national publications. Shang received her bachelor's degree in economics from Harvard and her MBA from the University of Chicago Booth School of Business.