High inflation rates have left many Americans struggling financially over the past few years. The U.S. inflation rate was over 8% in 2022, and though it has fallen since then, people are still worried about their budgets. Over a third of working Americans are living from paycheck to paycheck, according to Fox Business.
And yet, over this same period, the U.S. economy has been growing, and the stock market has performed well. There seems to be a disconnect between the average American’s financial situation and the state of the economy.
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Radio personality and personal finance author Dave Ramsey recently gave an interview to TheStreet discussing this disconnect. Specifically, he addressed overspending as the main driver of discontent with the economy. Here’s what he had to say.
The money expert previously listed 10 everyday ways you’re wasting money.
Overspending as a Source of Discontent With the Economy
The average person can’t control the inflation rate, the unemployment rate, housing prices, the stock market’s performance, or other major economic indicators. They can control only their own behavior in response to fluctuating economic conditions.
“People are anxiety-ridden by the economy, and they’re boxed in,” Ramsey argued. “Yet they spend like they’re in a prosperous economy, buying superfluous stuff instead of necessities. It’s shocking how people are budgeting while complaining about the economy.”
Consumers lose some of their purchasing power when the inflation rate rises, as it did during the COVID-19 pandemic, the Federal Reserve Bank of St. Louis reported. They have to spend more to buy the same things and are left with less money in their budgets.
Ramsey’s solution is to reduce your spending. He compared high inflation to a storm people have to weather:
“If you’re in the middle of a storm, you batten down the hatches,” he said. “You don’t keep jumping in puddles. You get inside, close everything up and huddle until the storm passes.”
Ramsey recommended sticking to the necessities and cutting out nonessential purchases as much as possible.
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5 Tips for Cutting Unnecessary Spending
But how do you go about cutting back on your spending?
The majority of Americans say they’re overspending, so clearly, it’s a common problem. Changing your spending habits isn’t easy, though. The suggestion to “just stop buying anything you don’t need” doesn’t help anyone make meaningful changes to their finances.
Instead, try these actionable tips to reduce your unnecessary spending.
1. Start Tracking Your Spending
Tracking your spending is the best way to keep tabs on where your money is going. Once you have this information in front of you, it’s much easier to identify bad habits and areas where you can reduce your spending.
There are lots of free personal finance apps and websites that will help you track your spending if you don’t want to do it by hand.
2. Wait 24 Hours Before Buying Non-Necessities
The average American spent more than $150 monthly on impulse purchases in 2023, according to Statista. That’s more than $1,800 per year.
The urge to impulsively buy items is strong, especially with online shopping, but simply waiting 24 hours before you press “purchase” can make a huge difference.
Often, after 24 hours pass, you’ll either forget about the item or realize you didn’t need it. Introducing this mandatory waiting period for buying nonessentials will help you significantly reduce your impulse spending, and your overspending, in general.
3. Cook at Home More Often
Between meal delivery services, meal kits and just going out to eat at restaurants, it’s easy to overspend on food. The more budget-friendly option is to cook at home more often.
Try cooking dinner with budget-friendly ingredients from the grocery store and taking the leftovers to work the next day instead of buying lunch. The savings will add up over time.
4. Delete Shopping Apps From Your Phone
It’s all too convenient to scroll through shopping apps on your phone while you have a few extra minutes somewhere.
Before you know it, you see something you want, and it’s incredibly tempting to buy it, even if you don’t need it. Removing these apps from your phone removes some of that temptation as well.
5. Make a Budget
Budgets may not be glamorous, but they are helpful. Create a budget with limits on what you can spend in each category.
For example, you might budget $100 toward entertainment each month. Once you hit that limit, you stop buying items in that category until the next month.
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This article originally appeared on GOBankingRates.com: Dave Ramsey: ‘It’s Shocking’ How Much People Overspend — 5 Ways To Stop Spending on Nonessentials
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