How to Curb Impulse Buying
“All the junk in your house used to be money”
I read that quote on Instagram this week and it got me thinking. If you looked around your room right now, could you add up the cost of all the things you see? How much money would it represent? And how much of that stuff do you actually need?
Hands down the best way to improve your personal finances is to limit unnecessary spending. Easier said than done, right? That’s where I come in. Let’s look at a few strategies that will help put you back in control of your cash flow!
The 24hr rule
The keyword of impulse buying is impulse! Advertising is designed to make us want to part with our money and it is EVERYWHERE! And not just that, but online shopping makes it easier than ever to mindlessly buy things.
Try this: If you get the urge to buy something, hold off and wait 24 hours. If you still want it, ask yourself these questions:
· Do I really need it?
· Why do I want this?
· How many hours do I need to work to afford this?
· What can I sacrifice to make room in my budget for this?
· What else can I buy with this money?
The simple act of stepping back and asking yourself these questions will help limit your impulse buying. I’m not saying don’t buy anything ever - just think about what is motivating your buying habits. Knowledge is power and knowing is half the battle.
It’s a trap! Afterpay works on instant gratification. It takes advantage of the reward centres in our tiny monkey brains that make us feel good when we buy something. But borrowing money for non-essential items is the quickest way to get behind in your budget.
Instead of “4 easy payments of $100”, why not try saving $100 a week instead. The sense of accomplishment will be far greater than working to pay off a debt for an item you already have. This is where you need to change your thinking. And changing your thinking will lead to big pay-offs in the future.
Instead of spending money you don’t have - start a “medium term” savings account that you pay into each week and can use to buy nice things for yourself. We’ll examine different saving strategies in a subsequent blog post - I have a LOT to say on the topic.
Buy second hand
Ok, so you have decided you want to buy this item, and you have changed your habits and put aside the money. Let’s take it one step further - can you buy it second hand? For some things this decision is easy. I buy a lot of my clothes, books and furniture second hand. But certain things like computer and audio equipment I always prefer to get brand new - because they come with a warranty.
Here are a few things to weigh up when considering whether to buy second hand:
· How much use will I get out of it?
· Will the item hold its value?
· How much will I save overall?
· Are there benefits to buying brand new? (like warranty or return policy)
· Do I plan to claim this on tax?
I’ll give you a great example. I wanted to buy a gym bag to keep in my car with a spare change of clothes and gym towel (due to my annoying habit of forgetting these things) I planned to spend about $50, but before I went out to look for one I mentioned to my friend that I was looking and she gave me one that she wasn’t using for free! So I just saved myself $50 and trip to the shops
HUGE TIP - If you are planning a wedding, consider buying a second hand wedding dress. You can save hundreds of dollars on an item that you will only wear once.
Make your money work for you
The best way to curb your impulse spending is to put a limit on it. Work out what you need to spend on bills and ESSENTIAL purchases first, put a little aside for the future and what is left over can be used for non-essential purchases.
By giving your money work to do and prioritising things like saving for the future and paying down debts, you can put yourself in a good position for the future
"Just remember - you can have your cake and eat it too."
Lets say your weekly limit for non-essential purchases is $100. That’s a good amount - after all we don’t want to feel like we are punishing ourselves.
This weekend is Mother’s Day and I want to spend about $50 on a Mother’s Day gift (don’t at me) and I’ve had my eye on these workout tights that are $70. Rather than spending over my budget, I’ve decided that this week I am putting Mum first and I can wait until next week to get my tights :)
Make a list
If you have a bunch of big ticket items that you would like to buy, write them down on a list and estimate how much you would like to spend on each. I did this when setting up my music business. Let’s use that as an example:
I then started a new savings account that I deposited $200 into each week. Once I had enough for each item, I purchased it and crossed it off the list. In just a few months I had all the items on my wish list and I wasn’t stuck paying off a loan.
These strategies have worked for me over the years and although I allow myself the occasional little splurges (we are all human after all) I’ve got a handle on my impulse spending.
What I want you to take away from this article is a change in thinking. Instead of SPENDING what you have and saving what is left over, try SAVING what you have and spending what is left over. It’s not about self-control - that kind of thinking will make saving feel like a punishment. It’s about Freedom. Freedom from debt and the freedom to reward yourself with the things you truly want, and the feeling of knowing that you have earned it
These tiny changes in thinking will make huge differences in your personal finance. The smartest thing you can do is live within your means.
And for pete’s sake DITCH THE AFTERPAY!