Impulse Spending Can Destroy Your Savings Potential
We ALL face challenges when it comes to our spending behaviors. In this country, there is a seemingly endless list of “things” to buy or do that sound fun, interesting, or enjoyable, or that fit the “got-to-have-it-now” mold.
We typically lump the purchase of such items into the category of impulsive spending. They might come in the form of large purchases like cars, ATVs, and vacations, or they can be more mundane things we spend money on, such clothing, restaurant meals, toys for the kids, or even a new cell phone.
There are, in fact, several times of the year when our national obsessions lead many households to throw caution to the wind, pull out the credit cards, and swipe to what they think will be their heart’s content. In the end, such hope for their heart’s content usually turns into financial heartache that can end up serving as fodder for arguments between spouses and partners.
So what are these seasons of impulse? Some are old, some are new, some are obvious, some surprising. But none should be ignored if you have ever fallen victim to impulse purchases.
Not surprising, late fall and early winter, with Thanksgiving and Christmas holidays and their corresponding traditions of food, decorations and gift giving, top the list by far*. As far as holidays go, Mother’s Day, Easter, Valentine’s and Father’s Day follow. Surprisingly, Halloween, with the increasing interest in decorating to the max and handing out full-sized candy bars, comes in sixth.
Even more surprising (except to parents) is the cost of sending children off to college and even back to school. When we know that we will be shelling on $200, $500 or even several thousand dollars to get our children off to their new campus or back on their old one, it becomes far too easy to justify impulse purchases of all things in the store aisles that might make our young one’s life easier or more comfortable. Retailers know this and place high-impulse items near checkout stands and on aisle caps so we can’t miss them.
Other noticeable impulse spending seasons of the year include the Super Bowl week (just gotta have that bigger screen, Higher Def TV), the 4th of July (illegal fireworks are seemingly everywhere), and Saint Patrick’s Day.
Finally, but certainly not least, is the newest American holiday: Amazon Prime Day! All of you Amazonian Primers know who you are. If you just cannot pass up a good deal, whether or not you are going to use or give the item in the next four or fix or thirty-six months, you likely have impulsive spending tendencies that ought to be addressed. The $2 billion dollars or so that we spent on Amazon Prime Day 2018 (just the fourth ever) was 40% of the amount we spent on Black Friday 2017.
Understand that there are many forces at play to tempt you to part with your money. Your money must be important to you.
Regardless of whether our financial impulsiveness happens at holiday times or because we are in the wrong store at the wrong time and in the wrong mood, this type of spending tests our personal discipline. It reveals whether or not we let these sorts of purchases crash our budgets if we have not planned and prepared for them. Here are a few tips on how to overcome impulse spending generally:
- Write down your financial goals on a small piece of paper and carry it with you in your purse or wallet. When tempted to make an impulse purchase, compare it to your list of goals to determine which is more important.
- If you are in a store, tell yourself you will think about the purchase once you get to another aisle. Then, put the decision off until you are at the checkout stand. Then, tell yourself you will wait until you are in the car before deciding. Once you are seated back in the car, you will likely realize that you can do just fine without making that additional purchase.
- If you are shopping online and see a “limited time” offer, especially those that say that there are only a few minutes left on the special deal, keep in mind two critical pieces of information: first, you did not plan or prepare for the purchase and can therefore not afford to buy the item, whatever the price, and two, the countdown, though real, is a marketing gimmick. Tell yourself that you are not a lab rat in a maze and that you do not respond to sales gimmicks by pushing a button every time the seller tells you that you must do so before time runs out. “I am not a rat. I am not a rat. I am not a rat.”
- If you feel you have to buy something now to take advantage of a great sale price, repeat the following to yourself, “Sales come and sales go. But my money only goes once.” Then, make sure it goes to the most important things in your monthly spending plan.
Developing effective spending habits is not an overnight accomplishment. It takes weeks, months and sometimes years. Rather than expecting perfection in your finances all at once, watch for positive patterns and progress over time.
If you have any questions, would like to discuss your financial challenges, or are just looking for advice, please call us at your convenience. As always, we are here to help and look forward to hearing from you.