Avoid overspending with this simple mindset shift

“It’s only this much.” “It’s only on sale this week.” "It’s only available for a limited time.” 

Let’s be honest. We’ve all purchased something unnecessary by rationalizing with the "it’s only" mindset. For some, those two words can mean the difference between staying on budget or going further into debt.  

With record-high inflation in 2022, over half of Canadians are turning to budgeting to combat increasing prices, meet their financial goals, and manage overspending. Cutting back and hunting for deals can reduce your expenses, but looking for bargains everywhere can make refusing them nearly impossible, no matter what your budget says. 

To help keep your spending at bay, remember that not every bargain is as good as it seems. Let’s ditch the “it’s only” mindset. To help you get started, we’ve decoded what makes a 'good deal’ and how even the best bargains can break your budget.  

What makes a "good deal"?

Given the economy, everyone seems to be looking for a deal, but what makes a good deal? Stores are often filled with flashy advertisements, limited-time offers, and bright red sale signs designed to lead you to make impulse purchases. This advertising strategy prompts us to act fast out of urgency or FOMO (fear of missing out) on purchases we never planned to make.

We apply the same thinking when rationalizing an impulsive purchase, allowing us to adopt that “it’s only” mindset. Imagine visiting an electronics store for a $15 phone charger and seeing a sale sign that reads, “TODAY ONLY: Headphones on sale for only $39.99!”. You recognize that you’re here for a charger and don’t necessarily need headphones, but the price is attractive, saving you $20. We rationalize the purchase by telling ourselves that $39.99 won’t break the bank and that it’s much better than the original price of $60. We feel instant gratification from purchasing the headphones and trick ourselves into thinking it is a “budget-friendly” choice since we saved money on the headphones even though we spent more than planned.

How many “good deals” does it take to break your budget?

The “it’s only” mindset can be triggered in all types of shopping scenarios, small and large purchases alike. For example, when deciding to make a large purchase, we tend to focus on the minimum payments to rationalize our decision, like, “It’s only $87/biweekly”. However, if this large purchase was unplanned, an extra $174 per month can place stress on your budget, leading to reduced savings, increased debt, and potentially missed payments and poor credit. To play into this mindset, retailers are now more commonly offering “Buy Now, Pay Later” options to attract buyers by promising smaller, spaced-out payments and interest-free financing. 

Smaller ticket items are easy to rationalize using the “it’s only” mindset since they appear to have a smaller impact on our budgets. Purchasing an $8 sandwich three days a week adds up to almost $100 by the end of the month. That sandwich, plus your daily coffee and the subscription service you forgot to cancel, can quickly add up to hundreds of dollars per year, most of which many of us don’t account for in our budgets.

How do I avoid overspending?

Building a habit can be mindless; breaking one is the tricky part. We've all experienced the “it’s only” mindset, which we can curb. Test out these tips to resist the power of suggestion and avoid overspending on unnecessary purchases.

• Budget, budget, budget. Having a plan to guide your spending decisions can help you stay on track and resist purchasing unnecessary goods or services. If you’re unsure where to start, check out our budgeting blog. 

• Start with a goal. This year, challenge yourself to set a new financial goal. This could be anything from refreshing your budget to reducing your debt or creating an emergency fund. Having a goal for your money can help curb impulsive overspending.

• Take inventory of what you already own. If you love new things, try shopping in your own closet; you might be pleasantly surprised by what you already own. If not, you might be able to sell something you don’t use to fund the item you want to purchase. 

• Follow the 24-hour rule. If you find something that you feel is a must-have, wait 24 hours before purchasing it. Give the adrenaline of the sale some time to pass by getting away from those tempting sale signs. Creating that space allows you the opportunity to think about your purchase, reference your budget, realize you own something similar or forget about it.

• Cleanse your inbox. If you’re an avid online shopper, reduce the temptation to purchase unnecessary items by cutting them off at the source. Go through your inbox and unsubscribe from promotional mailing lists. It’s hard to be tempted by a deal you don’t know about!

• Delete your digital wallet. It’s simple to overspend when checkout is one-click away. Removing saved payment information and Apple or Google Pay will make one-click payments less accessible, giving you more time to consider your purchase.

• Write a shopping list. If you find yourself going shopping for two things only to leave with ten, a shopping list may help you stay on track, avoid temptation, and leave with only the things you need. 

Nothing beats the feeling of getting a good deal, but budgeting and smart spending can deliver long-term feelings of security, empowerment, and gratification. So, start the new year off on the right financial foot and leave the “it’s only” mindset behind!  

If you struggle with overspending and find it difficult to pay back your debt, we’re here to help. At Grant Thornton, we offer judgment-free, consultations to help you find the best path to debt freedom. Call today at 1-844-4GT-DEBT and start 2023 on the path to a financial fresh start!