“Canadians Overspending in Summer, Struggling to Save: CIBC Poll”

Perhaps you found yourself overspending while celebrating a friend’s wedding or indulging in a cottage rental that wasn’t within your financial plan, leaving you uncertain about how to cover the expenses. This situation is common, as highlighted in a recent CIBC poll revealing that over half of Canadians tend to spend more during the summer, whether on travel, dining out, or entertainment. Moreover, 74 percent of Canadians are facing challenges in saving due to the escalating cost of living. 

Financial instances of overindulgence, regardless of when they occur, often result in feelings of stress and overwhelm when the bills arrive. To help you bounce back, we consulted with two experts who shared their key strategies for overcoming a financial hangover and preventing future overspending urges. 

Understand and Process Your Emotions 

After exceeding your budget, whether through a single purchase or a period of overspending, it’s common to experience emotions like shame and anxiety. However, it is more constructive to show self-compassion, understand your financial choices, and use them as learning experiences rather than criticizing yourself. Shaun Maslyk, a certified financial planner and advocate for financial wellness, advises against self-blame, as it exacerbates the situation and hinders debt repayment efforts. Recognizing the emotions driving your spending habits is crucial, as spending can sometimes serve as a coping mechanism for uncomfortable feelings. 

According to Maslyk, fear, greed, and stress are the primary emotions that often lead to overspending. For instance, feelings of loneliness or guilt during holidays may prompt excessive spending on gifts, while social comparisons on social media might push individuals into debt to keep up with peers. Recognizing these emotions is the first step in addressing and curbing overspending tendencies. 

Bourree Lam, a journalist at the Wall Street Journal and co-author of The New Rules of Money, recommends an exercise from her book called “How to YOLO responsibly,” which involves tracking impulse purchases and assessing their long-term impact after six months. This exercise helps individuals understand their spending patterns and align short-term decisions with their overall financial goals. 

Restore Financial Stability 

Once you have reflected on the reasons behind your overspending, creating a debt repayment plan is essential for regaining control and boosting your confidence in managing finances, as suggested by Maslyk. Reviewing your expenses to identify potential savings is a good starting point. However, it is important not to drastically overhaul your budget or create a restrictive plan that hampers your financial well-being. 

Lam advises a strategic approach to debt repayment, emphasizing the prioritization of high-interest debt. For instance, if you have multiple credit cards with outstanding balances, focus on paying off the card with the highest interest rate first. It is acceptable to adjust or pause savings goals temporarily to prioritize debt repayment. 

Establish Financial Goals 

Both Lam and Maslyk stress the significance of setting financial goals to avoid future regrets. Maslyk suggests asking yourself what you aim to achieve with your money to gain clarity, resist temptations, and align your spending with your values. According to Maslyk, having a clear goal helps in avoiding unnecessary spending driven by social pressures or feelings of inadequacy. 

Lam supports this idea by emphasizing the value of having a central goal that you can refer to when tempted to overspend. Whether it involves paying off debts, saving for retirement, or reaching a milestone like purchasing a home, defining a goal can aid in maintaining financial discipline. 

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