If you want to get ahead financially, then you'll need to get spontaneous purchases under control.
Impulse buying is the bane of anyone trying to get ahead financially. It refers to buying things on a whim, spontaneously, without having them on a list or within a pre-determined budget. While all of us encounter lovely things we'd like on a daily basis, it's crucial to get this urge for ownership under control if one hopes to save significant amounts of money. Even if the actual purchases are small, they will add up over time.
A helpful article on finance blog Goodbye to Broke offers a detailed plan for quitting impulse buying once and for all. From understanding what it is, to analyzing its causes and the effects it has on our personal lives (not to mention bank accounts!), author Megan explains exactly what a person needs to do in order to break their spontaneous shopping habit. I will share some of the suggestions below, as I think they're useful for anyone wanting to become more financially savvy.
1. Have a budget.
You've heard it a million times before, but this is fundamental. You don't have to record every single penny spent, but Megan recommends creating a spending plan, at bare minimum.
"It’s incredibly important to find a system for organizing and tracking your finances that works for you. When we feel disheveled and disorganized, we’re more likely to act on impulse."
2. Have a bigger goal.
Megan calls it "your why," and it should be a focal point in your financial decisions, something that keeps you on track because you know you're saving money for something bigger and better. Whether it's a new house, a renovation, a fabulous trip, or a new business, knowing your "why" is a great form of accountability.
3. Know your triggers.
We all tend to shop more under certain circumstances. Maybe we're feeling lonely, sad, or hungry. Perhaps we shop from a sense of peer pressure, or fall for online ads and promotional emails. Pay attention to what triggers you to buy impulsively and try to avoid those situations.
4. Create small amounts of friction.
This is a beautifully simple suggestion. Megan recommends making it slightly harder to shop, in order to create a mild deterrent. Consider deleting shopping apps from your phone and unsubscribing from brand newsletters and promotions. Limit yourself to a cash budget, leave your wallet in the car, never save your credit card number online, or block your favorite shopping sites; she suggests using StayFocused, a browser extension.
5. Beware of the 'Diderot' effect.
Sometimes we buy things that require further purchases in order to construct a new identity. Megan writes,
"You’ve probably seen this play out in your own spending numerous times: Buy a new dress and then you have to buy shoes and jewelry to go with it. Pay for a gym membership and all of a sudden you need a yoga mat, exercise ball, and that band thing that goes around your arm to hold your iPhone. Buy a new microwave and then upgrade the rest of your appliances to match."
While there's nothing wrong with wanting to improve yourself, there are ways of doing it that cost less. Be shrewd and think about the long-term implications of certain purchases and whether they'll require additional items.
There are more helpful ideas in the original article on Goodbye to Broke, so check those out if you're interested.