Let’s face it, we’ve all made an impulse purchase at some point in our lives, some more than others. An impulse buy is anytime you purchase something you weren’t planning to. Grabbing a candy bar at the checkout line, stopping to grab a coffee at Starbucks while you’re heading to work, getting dinner delivered to you when you don’t feel like going out or cooking, and buying a pair of sneakers that you don’t need, but since it’s on a sale you decide to buy it, are all examples of impulse buys.
Impulse buys are typically driven by emotions, where buying things is a way to make you feel better and it could become a habit in the long run, however, your finances can also take a hit when it comes to those types of purchases. Overspending can end up as a result of buying things on impulse, especially if you aren’t keeping track of your finances. Here are a few ways you can break those impulse spending habits.
Create a Shopping List with a Set Budget and Stick to It
Try to make it a habit creating a shopping list ahead of time and be more intentional with it. Beforehand, determine your needs and wants, needs are essentials that are required to live (i.e., groceries, rent, bills, gas) and wants are things that you spend money on that aren’t absolutely necessary for day-to-day life (i.e., eating out at restaurants, excess clothing, vacations). After that, make a shopping list of the things you need to buy while you’re out. Once you make that list, look into your finances, and set a budget of how much you should spend on the items that you need so you won’t overspend on other products.
Create a rule: if the item you intend on purchasing because you “want” it is not on that shopping list you made, then you cannot buy it while you’re out on this shopping trip. Only stick to what you need.
Track Your Spending and Finances
Try to make it a habit of checking on your spending accounts often so you’re aware of what you spent and what you have leftover to spend. Start a savings account (if you don’t have one set up already) for emergencies and as a back-up plan for financial hardships. Consider having a portion of your paychecks going into your savings (or money market) account automatically. Try to limit yourself as well and only pull funds from your savings account if they are for emergencies. You can also take advantage of using an online financial calculator to help you figure out how much you have left to spend and where your money is being spent after entering in your income and monthly expenditures.
Stop Paying for Convenience
It’s time to stop paying for food deliveries and services of that nature because they are convenient. DoorDash, GrubHub, Postmates, Instacart and other services are very useful for when you may need to depend on someone to deliver food or groceries. However, if you’re someone who takes advantage of using them regularly, it could take a huge hit to your overall budget. When you use those services, you’re looking at not only spending money on the food, but also service and delivery fees, as well as tips. This also applies to eating out at restaurants often and stopping to buy a coffee before you go to work.
These costs add up, and you could do the math to see how much you’re spending a week using them compared to how much it would be to grocery shop and utilizing what you have at home to use. If you need tips for how to effectively shop for groceries while on a budget, look at this previously written blog.
Use Cash Only Payments
Another way to reduce impulse spending is by paying with cash when you do your shopping. Cash only payments help make you think twice about the items you want to buy, whereas when using a card, you don’t have much of a limit. With cash you visually see yourself losing money in real-time, so it helps you from getting carried away since you only have a specific amount on you at the time.
Wait 24 Hours
Waiting 24 hours before making purchases helps give you time to decide on whether or not you should make that purchase. This also gives you time to reflect on if you essentially “need” that item and would utilize it right away. If you really want this item after waiting 24 hours, maybe then you should go back and buy it, but consider how it’ll affect your finances and overall budget. If after 24 hours you find that you don’t really need the item and feel you may get buyer’s remorse, then don’t purchase it. The 24-hour waiting period helps you take all of these things into consideration and can ultimately help you save money.
If making impulse purchases are more common to you than you think, maybe you should consider talking to a financial advisor for advice about savings and tips to help you save money. Contact Michigan First Wealth Management Group to find out how to make your money work for you.
Securities and advisory services are offered though LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products offered through LPL or its licensed affiliates. Michigan First Credit Union and Michigan First Wealth Management Group are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using Michigan First Credit Union and may also be employees of Michigan First Wealth Management Group or its affiliates. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Michigan First Credit Union or Michigan First Wealth Management Group. Securities and insurance offered through LPL or its affiliates are:
|Not Insured by NCUA or Any Other Government Agency||Not Credit Union Guaranteed||Not Michigan First Credit Union Deposits or Obligations||May Lose Value|
The LPL Financial registered representatives associated with this site may only discuss and/or transact business with residents of the states in which they are properly registered and licensed. No offers may be made or accepted from any resident of any other state.
Michigan First Credit Union provides referrals to financial professionals of LPL Financial LLC (“LPL”) pursuant to an agreement that allows LPL to pay the Financial Institution for these referrals. This creates an incentive for the Financial Institution to make these referrals, resulting in a conflict of interest. The Financial Institution is not a current client of LPL for brokerage or advisory services. Please visit https://www.lpl.com/disclosures/is-lpl-relationship-disclosure.html for more detailed information.