Do you ever ask yourself, "Where did all of my paycheck go?" Impulse purchases may consume a hefty portion of your hard-earned money, leaving your bank account empty.
Whether your off-the-cuff purchases happen online, in the grocery store, or at the outlet mall, they can add up — especially when you're not paying attention. Leaving this habit unchecked could result in overwhelming credit card debt, an inability to pay bills on time, or damaged relationships—all for stuff you likely didn't need.
To build a buffer between you and buying all the things you think you want, employ these 10 tips:
1. Set short-term goals.
Curtail compulsive urges by making a plan. Start by setting realistic financial goals like establishing an Emergency Savings Account, saving up for a vacation, or getting a professional certification. Then set aside a specific amount each month. As you watch your savings grow (instead of your collection of things), you'll be encouraged to keep the momentum going.
2. Compare an item's price with its value.
Before impulse buying, calculate the number of hours you worked for the amount on the price tag. It'll be eye-opening to realize the money you're about to spend took 24 hours of work. That's an entire day, or three work days, of your life.
3. Weigh the pros and cons.
Identify both the positive and negative consequences of your impulse purchase. Positive outcomes may include a happier, healthier life versus adverse effects, like missing your savings goals, an inability to pay essential expenses, and increasing your debt. If the negatives outweigh the positives, this isn't your purchase.
4. Identify your danger zones.
Do you only need five items at the grocery store and walk out with a cartful? Do you impulse buy online? Once you've identified your weaknesses, determine your defenses. That could include bringing a buddy to help you say no, eating before grocery shopping, or restricting online shopping.
5. Make lists
You're less likely to overspend when you go to the grocery or department store with a list. That's because you're not aimlessly wandering the aisles, guessing what you need. Beyond creating lists before shopping, you can add items that catch your eye to a 30-day list. Once 30 days have passed, revisit the list. If you still want the thing, then work it into your budget.
6. Give yourself a budget
If you're bound to make impulse purchases no matter how many lists you create, then we recommend planning for the unplanned. Add a set dollar amount to your monthly budget for shopping splurges. Once you've reached your monthly limit, stop.
7. Find an inexpensive hobby.
Some of us shop simply out of boredom, particularly online. Next time you find yourself twiddling your thumbs, don't hit up your favorite online retailer. Instead, do something more constructive and less expensive, such as reading, gardening, fitness, or art.
8. Reduce temptation
Cut the lure of impulse shopping by unsubscribing from your favorite retailer's marketing emails and social media pages. Start making a beeline for the items you plan to buy. And check your inner dialogue at the door. Don't allow it to sabotage your best efforts with thoughts like," "You deserve it," "Everyone else has one," or "It's on sale."
Need guidance on setting your financial goals? Learn more about starting your journey to financial freedom today.