3 Signs You're Spending Too Much -- and What to Do About It

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Overspending could have serious consequences. Here's how to know when you're going overboard.

If you've been socializing with friends, going out to dinner, and actually leaving the house more often these days, you're in good company. A lot of people spent much of 2020 and the first part of 2021 isolated at home, waiting on coronavirus vaccines to arrive and for things to generally improve with the pandemic.

For the past couple of months, things have looked up, and it's natural to want to make up for lost time. There's just one problem -- you may inadvertently spend more than you can afford to, and hurt your finances in the process. Here's how to know if you're going overboard on spending.

1. You can't pay your credit card bill

Many of us charge expenses on a credit card all month long. But if you find that you can't pay your bill in full, it's a sign you need to cut back on spending. Any time you carry a credit card balance, you lock yourself into paying interest -- and that's akin to throwing money away.

2. You have to dip into your savings repeatedly

There's nothing wrong with taking a withdrawal from your savings account on occasion to fund a larger purchase or pay for a vacation -- as long as that money isn't part of your emergency fund. But if you've hit up your savings account these past few months to cover everyday spending, it's a sign you may need to rethink things.

3. You're not putting money into savings like you normally do

Saving money monthly is a good thing, and if you typically do, congrats. But if you haven't been saving any money these past few months, it may be time to take a closer look at your spending and make some changes.

How to curb your spending

If you've realized that your spending has been excessive of late, a good solution is to put yourself on a budget. That gives you a clear sense of your expenses, and you may be able to shift some money to spending categories that are more important to you.

It's also a good idea to automate your savings so that some money goes from your checking account to your savings account each month, before you touch it. If you're all set on near-term savings, set up an automatic transfer to an IRA, so money gets set aside for retirement. (If your company offers a 401(k), your contributions come from your paychecks automatically, so you shouldn't have to take more action once you sign up.)

It's a good thing that it's easier to get out and have fun these days. Just don't let your newfound freedom derail your personal finances or land you in debt.

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