It’s December. That means holiday time. And increased spending. And stretched budgets. This typically means a lot of stress. So I think this is the perfect time to discuss some strategies to manage and curb overspending. And let’s be honest…most of our overspending happens on Amazon.
It’s a real problem. I get bout by the urge every once in awhile. And I’ve had multiple doctors come to me and say that their biggest spending issue is Amazon.
So, sorry Bezos…but I’m focusing on your little shop here!
9 strategies to manage overspending on Amazon
In no particular order…
1. Spend intentionally
For yourself and others.
Intentional spending is the concept that one is intentional with the money that she or he spends. Meaning that any purchase is well thought out and carries an intended purpose.
I’m not going to go in depth about it in this post because I do just that right here.
But the just is that we should stop and consider if the joy we (or the receiver of our gift) will get from the purchase is greater than or equal to the price. It’s obviously an abstract thought process but just going through it has been shown to help us make better decisions.
Again, this is not to say don’t spend at all, but just to spend intentionally.
2. Don’t use a line item labelled “Amazon” in your budget
You can find a template of the budget that Selenid and I use here.
And in it, you will see a bunch of line items for different “wants” and “needs” ranging from home mortgage to entertainment to kids’ clothes. What you won’t find, however, is a line item labelled “Amazon.”
That doesn’t mean we don’t shop via Amazon, because we do. But we will split out all costs into their more basic categories.
This helps keep us honest and keeps “Amazon” from becoming a black box expense item where our hard earned money goes to die.
3. Shop local
It’s no surprise that people spend more via online shopping than they do in person. Psychologically it makes sense.
The same way it makes sense that people paying with a credit card spend more than people paying in cash. Buying online feels “free.” Until the bill or debit/credit card statement comes.
So, do your shopping in person. Support local stores and manage your overspending habits on Amazon. Win-win.
4. Use cash
I alluded to this strategy above. It’s basically the “envelope strategy.”
Take out a certain amount of money to spend each month on Amazon and put it in an envelope. Every time you buy something on Amazon, take the equal amount of money out of your envelope and deposit it into the account you made the online purchase from.
When the money in the envelope is done, so are you.
5. Don’t shop on your phone
Whenever I buys something online using my phone, I started to recognize that I do it a little more impulsively and with a little less thought. I think again this comes down to having the purchase feel a little less “real.”
To combat this, I try to make any online purchase and certainly any large ones using my computer. It forces me to sit down, usually with Selenid, and talk the purchase out.
It basically forces us to think about the purchase intentionally rather than to buy it impulsively based on our dopamine response.
6. Use an accountability partner
This may be the most effective strategy to manage overspending on Amazon on this list.
Because alone we are weak. Together we are strong. Especially when it comes to building habits. Financial or otherwise. It’s why people stick to working out more when they do it with someone else. It’s certainly part of the reason that I’ve been able to turn around my finances…I have an incredible accountability partner in Selenid and vice versa.
So, find someone to help hold you accountable to your online spending. You obviously have to be comfortable with this person because honestly and transparency is key.
Tell them your spending limit and give regular updates.
7. Build a “fudge factor” into your budget
Back to budgeting. I get that everyone’s first reaction to budgeting is to hate it. But it really is a treasure map to your financial freedom. It tells you what you can spend while still reaching your financial goals.
Anyway, rant aside, I also love the idea of building a fudge factor into your budget and I do it myself. The fudge factor is a line item in your budget for any extraneous expenses or, more likely, any areas where you go slightly over your allotted amount in a certain category.
I think a lot of us spiral into bad habits because when we make a small mistake we feel embarrassed and ashamed and either give up the habit or conversely lean into a bad habit. The fudge factor gives you some wiggle room and built in grace if you go over your spending limits.
Now, don’t abuse it.
Don’t just figure this extra amount into your spending limits. The goal is really not to use it. But it’s there if you need it once in awhile and it helps you stay on track.
8. Reward yourself
This dovetails off of the fudge factor idea.
Let’s say you create a fudge factor of $250 in your budget. Well, each month that you don’t overspend and don’t eat into your fudge factor, reward yourself!
You can do that a couple ways: you could put it aside to save for a bigger ticket item you want. Or, and this one is my favorite, you can invest that money in a broadly diversified, low cost index fund.
Let’s say you invest that $250 monthly for 25 years in a low cost index fund with after tax return of 5% annually. At the end, you’ll end up with over $140,000 towards your nest egg and net worth building.
And if you are confused about how I came up with that number, check out this calculator.
9. Buy something worthwhile on Amazon
If you are going to buy something on Amazon, use your money to invest in yourself.
Buy some self care items. Maybe buy a book like this to improve your financial education and reach financial freedom.
(That’s a shambles plug for anyone who made it this far!)
Last thoughts on managing overspending on Amazon
It may seem silly. But it really is important.
If I ask most people, including high income doctors, what their one big spending bugaboo is, I feel very confident the majority will tell me it’s Amazon.
And just like this post talks about, doctors need to save money too despite our high income, if we want to reach financial freedom and practice on our own terms. (The post also includes some great tips to achieve this!)
In the end, financial well-being is all about creating and nurturing the rights habits so that building wealth becomes an almost passive thing.
Here are some additional posts to help with this:
- 7 Financial Habits of Highly Successful Physicians
- The Simple Habits That Will Make You Financially Successful
- Is Decision Fatigue Responsible for the Bad Financial Habits of Doctors?
What do you think? Do you worry about overspending on Amazon? How do you deal with it? Any tips for others? Let us know in the comments below!