Breaking Bad Financial Habits – Impulse Purchases
As you read this, you already know something about yourself, something very important. You know, without even having to think about it, if you are the kind of person who makes impulse purchases. You also know, with equal certainty, if this tendency to make impulse purchases is negatively affecting your financial situation. Over the next few weeks, I’m going to write a series of articles about breaking bad financial habits – and I’m starting with a big one – impulse purchases. To be sure that you receive each of the articles in this series, sign up for my site feed, via RSS or daily email.
First, it might do us some good to think about why we make impulse purchases. I, for one, tend to make them when I’m bored. Others, I’m sure, make them when they’re depressed. You, on the other hand, might only make them when you are happy – or as a way to reward yourself. Whatever the reason, it might be a good time to think of other ways to deal with your emotions, besides spending money. When I get bored, for instance, I’ll head to the gym or go outside for a walk.
It’s also important to think about the situations where we are tempted to overspend. I tend to spend more when I’m out with my family – especially if I’m at the grocery store, it’s getting late, and the kids are hungry. Perhaps you spend more when out with certain friends, or away on vacation. Some might be tempted to overspend when at the mall, or shopping online, or while watching late-night television. As we think about impulse purchases, keep in mind the situations where / when you struggle, and apply the techniques we are going to talk about to those situations.
Speaking of those techniques, here we go -
1. Make a commitment to yourself and agree that you will be more responsible with your finances. Four years ago, I promised myself that I would get out of debt. That commitment required me to make lots of sacrifices. Each time I would think about frivolous spending – I would remember my commitment. It sounds simple, but it really does work.
2. Learn to love your budget. Seriously, get over your fear of “the big bad budget”. We love our budget, because it not only guides us through the month, putting limits on our spending, but it also allows us to plan for little “splurges”. We use the You Need A Budget software to manage our finances. YNAB is a long-time sponsor of No Credit Needed and I’m proud to promote their product. Whatever method you use to plan your spending, honor your plan!
3. Consider an accountability partner. You might want to think about sharing your goal – your new commitment – with a close friend, or group of friends. It really does help to have someone with whom you can talk.
4. Cultivate friends who respect your financial decisions. This one can be tough, but I think it’s very important. If you struggle with overspending, especially overspending as it relates to group outings or activities, you might want to make a few new friends. This doesn’t mean that you have to rid yourself of your old friends, but it might mean that you need to change the nature of your relationships.
5. Think about implementing my $100-a-day-rule for preventing impulse buying. Click to read the post, but here are the details. If I want to make a major purchase, I have to wait 1 day for every $100 that I want to spend. A $400 television requires 4 days of waiting – and researching. This simple, even silly, rule really has helped me.
6. Never make a purchase that you ordinarily would not have made, simply because someone is offering you special financing / special rebates / or special discounts. In other words, never walk into a store, intending to spend $50 on paint, and then walk out with a $800 table saw, simply because the saw was “on sale”. Sales will come and go. If you haven’t planned for it – which means budgeted for it – don’t buy it. (This might mean, that once in a while, you will miss a great deal. On the whole, however, it will also mean that you have remained under-budget and that you’ve avoided foolish purchases.)
7. If you are married, talk to your spouse about ways that you can help one another avoid impulse purchases. It’s funny. A wife can plan to be frugal – and a husband can plan to be frugal – but then the two of them, when shopping together, can tend to be non-frugal. It’s like going on a diet. You might be willing to stick to your plan, but if your wife is having a piece of cake, you might be talked into having a piece of cake. Instead of working against your family goals, agree to be frugal, together. Be on the same team.
8. Make a big deal out of reaching financial goals. We are emotional creatures. If we struggle with making impulse purchases, it’s probably because we like the immediate emotional response we get from buying something. Let’s shift that response away from purchases, and let’s celebrate savings. Stay connected to the process, and you’ll be less likely to spend money on things you don’t really need.
I hope some of these techniques help, or at least get you to thinking. If you have any suggestions, for how we can overcome our tendency to make impulse purchases, I’d love to read them. You can leave a comment, here on the site, and you can also connect with me via Twitter. Simply follow me, and then shoot me a tweet.