How to Avoid Overspending Each Month

Take Inventory of Your Spending and Create a Budget

You can't really control your spending until you know where your money is going. Start off by tracking your expenses for a month. Gather up your recent debit and credit card statements, along with any receipts you have for cash transactions. Using a paper and pen, spreadsheet or money-tracking app, divide your expenses into categories—groceries, housing, utilities, dining out, clothing, savings, car and any other grouping that makes sense to you. Total up each column to see how much you spent.

If you've already created a budget, compare it to your monthly expenses to see where you're spending more than expected. If you don't have a budget yet, use your tracked expenses to sketch one out. Here are four questions that might help:

• What was your actual net income for the month?
• How much did you spend in total—cash, debit and credit transactions?
• Did your expenses exceed your income? By how much?
• Are there categories you can readily cut back on?

In some cases, however, overspending isn't the issue. You may have lost your job or had your wages reduced, or you've had emergency expenses pop up that decimated your budget. When your financial concerns go beyond simply spending too much, it's important to consider other options. For instance, financial assistance services are out there that can help connect you with things like government benefits, rent relief, legal aid and food assistance. You may also want to talk to your lenders about deferring payments.

Reduce Credit Card Spending

Ideally, your monthly income and expenses should balance without deploying your credit cards. Why? Large amounts of credit card debt can be difficult to pay off, and interest charges will add to ever-growing monthly credit card payments. Making matters worse, it can actually hurt your credit score to max out your credit cards or use up a large percentage of your available credit.

If impulse credit card purchases are what's affecting your finances, you might stop carrying your cards with you or storing your card information in your web browser. By adding this small barrier, you can buy yourself some time to decide the unnecessary (or unaffordable) expense isn't the best idea.

Do you switch to credit cards when you're concerned that your checking account balance is low? Try making a habit of checking your account balance every morning. You'll have a clearer picture of how much you have left to spend at all times—and maybe remind yourself to spend less and save more if your balance is low.

Reduce Spending on Food and Entertainment

You have to eat. But the amount you spend on food can vary widely, depending on what you eat and whether you dine out or eat at home. You can save money on groceries by keeping an eye out for weekly deals and coupons—and by sharpening your kitchen skills. Planning out a weekly menu, preparing multiple meals in advance, stocking your pantry and freezer with basics, and even cultivating a list of easy, low-cost recipes you love can help you live by a modest food budget.

When you do dine out—or get takeout—being mindful of meal costs can save you money. Look for deals from local eateries. Split a dish with your companion. Go for lunch instead of dinner. Consider sticking to water instead of ordering expensive drinks. Or, if that last tip sounds dull, skip the meal and head to happy hour for low-cost drinks and appetizers.

Reduce Monthly Bills

Recurring bills like rent or mortgage payments, utilities or phone plans probably make up a large portion of your monthly outflow, so they're a good place to economize. Here are a few opportunities to explore:

• Utilities: Cutting energy consumption is always a worthy goal. Use appliances less often, turn lights off and set the thermostat to a slightly less comfortable setting. Also consider switching to low-energy lightbulbs and appliances: They may save you money on utilities, though they'll also cost you upfront.
• Monthly phone or internet charges: Can you reduce your service level without suffering? Is a comparable plan available for less money?
• Insurance: Shop your home or auto policy to see if you can find a better rate. You may be eligible for a multi-policy discount if you have more than one policy with the same carrier.
• Credit cards: Bring your monthly payments down by paying off debt and resisting the urge to charge. Also explore whether debt consolidation might lower your monthly bills.

If your budget feels out of whack no matter how much you recalculate, take a closer look at your housing expense. Rent or mortgage payments can take up so much of your budget that there's barely any money left to live. Though moving is a big decision, you may want to consider finding more affordable housing or refinancing the home you own if your housing expenses are weighing you down.

Review Memberships and Subscriptions

Subscriptions, memberships and apps are easy to sign up for and even easier to forget about. Over the course of just a few years, you might have accumulated a few subscriptions that have since been forgotten or underused. Look through your phone, debit and credit card bills for recurring subscriptions and cancel any you don't need or use. Common suspects: gym memberships, diet apps, automatic magazine subscription renewals, and overlapping streaming service or cloud storage solutions. Also look for opportunities to share subscriptions with family or friends.

Track Your Progress

Over time, careful money management can help you minimize credit card debt, grow your savings, live within your means and reduce your financial stress—all valuable components of financial health. You'll have an easier time meeting these goals—and celebrating them—when you track your finances consistently. Three areas to watch as you go:

• Track expenses and stick to your budget. Use a money app to make it easier.
• Manage credit card debt and check your credit often to confirm your progress.
• Build your savings and enjoy the security of knowing you have emergency funds.

Make Your Finances Sustainable

Finally, be prepared to be flexible. Job changes, broken plumbing, major life events—these can all trigger unexpected spending. The goal of gaining control over your expenses isn't to eliminate life's financial surprises; that simply isn't possible. Instead, creating a structure and a plan helps make your finances more sustainable in good times and bad—including having an emergency fund at the ready. Figure out how to track your expenses, create a budget and keep your spending in check. Master your outflow and your financial goals will be easier to reach. Monitor your credit throughout the process can help you make sure you're setting yourself up for a great financial future.