On a scale of 1 to 5, with 1 being “not at all” and 5 being “always”, how often do you impulse spend? This is one of the questions I use when doing the mandatory counselling sessions under the BIA. And the answer, 99% of the time, is 3. Why? Because we all impulse spend on something, sometimes.
Is impulse spending a big issue? Maybe. Maybe not. It depends on whether it is impacting your other money plans. Does it impact your ability to pay your bills in full or on time? If so, then yes, it’s an issue. Does it take away your ability to save? (The answer, by the way, is always yes to that question :)) It then depends on what type of savings. If it interferes with your ability to have an emergency fund, then it’s an issue as it reduces your ability to handle unexpected reductions in income or increases in expenses. If it takes away your ability to save for a vacation, for example, then it’s a choice. You are choosing the item(s) you are impulse spending on over a vacation. That’s ok. It’s your choice. What tends to happen, however, is we don’t pay close attention to our impulse spends, or worse, justify them, and then get frustrated because we can’t have other things that we want. One of my favourite sayings when it comes to your finances is…“You can afford anything! You just can’t afford everything.“ Being aware, and making conscious spending decisions ensures a smoother path to achieving your financial goals. Period. Of course, it is not always that easy to change old habits.
What do we impulse spend on? When I ask the question of counselling participants, I usually get the following responses:
- “I buy things at the grocery store that are not on my list”
- “Video games”
- “Fast food on the go”
Most of the time it is small stuff. Occasionally, I get bigger answers such as tools, or online shopping. Seldom do I get the really big ticket items like “Purchasing a house that was (in hindsight) more than I could afford”, or “A car that was out of my budget”, or “Trips that we couldn’t afford to take”. Those are the game changes that can cause a major setback when it comes to longer-term financial goals such as paying off a home, investing, or living your desired retirement. I recently came across this article on “10 Ways to Stop Impulse Spending” and thought it was worthy of a share. Here is my take on the 10 tips.
Tips on how to stop impulse spending (or at least reduce it)
1. Limit social media use. People put their best face (and lives) forward on social media and it can be frustrating to watch others have what you feel you deserve. Keeping up with the Jones’s used to mean the next door neighbours, now it’s all of those other people on your social media feed. And let’s not forget the “targeted marketing” ads that pop up in your feed and on the sidebars.
2. Log out of Amazon, or whatever online stores you regularly buy from. This tip, of course, makes it less convenient to just ‘click and buy’ and may cause you to reconsider by delaying the purchase. I will be honest, I can feel the resistance to this one. Time is precious and I do like the convenience of not having to scramble for my card number every time I make a purchase.
3. Carry cash or a debit card instead of credit cards. Credit card spending encourages increased spending, period! If you don’t have credit, you can’t spend more than you make. I went on “cash spending” for a while and then I decided to use a credit card to get points to help me achieve my goal of travelling. Let me just say, that ONLY works IF you pay it off IN FULL every month. Otherwise, you are paying interest, and you have to deduct that off the travel points value you are earning. It takes discipline and a strong spending plan!
4. Use apps and plugins to help limit spending. The article suggests two extensions to help with online purchases: (1) Icebox by Finder.com - a Chrome extension that changes the “Buy” button to a “Put it on Ice” button, giving you more time to re-think your purchase , and (2) Amazon Contemplate – it adds a 30-second wait time before you can go through with a purchase. I had never heard of them and have already added them to my Google Chrome and will let you know how (if) they help J
5. Get a credit card sticker or decal. Ok, this is a fun idea. You put a sticker on your credit card to interrupt the buying process. Fun messages remind you that impulsive shopping is bad, and saving instead is good! How about you put a note about the goal you want to achieve when you stop impulse buying? I found this site to create your own credit card skin: https://mrlavish.co/collections/skins
6. Get an accountability partner. This could be your spouse if you have a good money relationship. I often recommend Mint.com as a money management tool and I love how more than one person can share the same account. You could also engage a friend or go more formal and get yourself a money coach.
7. For holiday shopping, go in with a list. I am a BIG list fan! And I do the tip suggested in the article. I keep a XMAS note in my phone and I jot down ideas throughout the year so I have a list to start from when I am ready to begin my holiday shopping. I then update it with the items I buy throughout the year, so I don’t lose track. Of course, pen and paper works well too J
8. Calculate the cost of things in time or work-hours, instead of dollars. I have to say, this never worked well for me. Too technical. I’m more of a heart-spender than a head-spender. But I see the value and the logic. Figure out your net hourly wage and then gauge your spends by that amount. So, if your net hourly wage is $20 and you buy a $500 TV, you, in essence, have to work 25 hours for it. That’s a lot of hours! Is it worth it? Don’t forget, if you put it on credit and don’t pay it off at the end of the month, you have to factor in the interest cost as well.
9. Return stuff. Make sure tags stay on items and receipts are kept until you are certain you are keeping it. I once had a client who spent over $200 at Walmart and regretted it as soon as she got home. She put the receipt in the bag and took the whole thing back the next time she went shopping. It may not be comfortable, but big beneficial decisions seldom are. Be brave! And in the words of Nike, “Just do it!”
10. Start a good ol’ fashioned no-spending challenge. I participated in a 30-day group challenge once. It was interesting. I failed. Yup, I said it J. But I did become more conscious about where my money was going and I did impulse spend less, so I consider it a win. Start small, like the original article says, do a no-spend on the thing that tempts you the most, like online, or clothes, or fast food. Celebrate the small successes.
Ok, I am off to give these a try. How about you? Would love to hear how you are doing. Post your comments below. Maybe we can be “accountable” to one another. Happy non-spending!