How to Never Succumb to Impulse Spending Again

By Mikey Rox on 16 October 2014 1 comment

Impulse spending can make it almost impossible for someone to manage their finances effectively. It creates a habitual need to spend and a knee-jerk reaction to sales, products, and advertising. And the result is usually the same: a lack of cashflow, problems saving, and almost always an inability to maintain a budget.

But what exactly is impulse spending? How do we define and/or recognize it?

Defining Impulse Spending

First, impulse spending is almost always chronic and recurring. To see something every once in a while and "splurge" is normal. Impulse spending is something that happens regularly and develops into a bad habit. (See also: 13 Creative Ways to Defeat Impulse Spending)

Second, buying on an impulse means that you're making an unplanned purchase that you hadn't already recognized a need for. These purchases might be useful and might even seem wise on the surface, but had you not made visual contact with the item, you probably wouldn't have wanted to spend money on it. In other words, an impulse purchase is made when a product or ad instigates the transaction. Instead of you deciding that you need something and then going to find it, you see a product or service and decide immediately that it warrants your money. Those who struggle with this end up spending a lot of money that they didn't need to spend or that wouldn't have been spent, had they been in control of their purchases. In fact, that's the real goal here — to be in control of how purchases.

1. Break the Habit With a Freeze on All Discretionary Spending

Impulse spending is a habit, so try breaking it by going cold turkey on all discretionary spending. That's not to say that you can't pick back up after a few weeks, but stick to essentials until you've given yourself enough time to get comfortable spending money on just those things.

The goal is to take away your tendency to be a reactive purchaser, before you take the steps necessary to build yourself back into a proactive budgeter. Once you can go into stores and see ads without feeling that twitch making you want to spend money, you're ready to move on. It'll happen quicker than you think.

2. Make a Weekly Budget

Budgeting is one of the simplest and most basic safety nets you have to protect yourself against impulse spending. There are plenty of ways to do it, like using a Dave Ramsey budget sheet. But the general concept is to start by writing down both your expected income and expenses for each month. Separate your expenses between the amounts that are fixed (rent, insurance, etc.) and those that fluctuate (gas, groceries). Use what's left to disperse between savings, discretionary spending, charitable giving, or however you choose to divide it up. That discretionary amount will serve as a safeguard to help limit your ability to spend impulsively.

You'll know that there's a limit to what you can spend, thereby making you less likely to buy something on an impulse. Instead, you end up asking yourself the question: "Do I really want to buy this?"

3. Practice Deciding What to Buy Before You Leave the House

After breaking with your bad spending habits, a good habit to get into is to always make a list or at least plan in your mind what you want to buy before you shop. This ensures that you're in control of your purchasing and that you're not being pushed around by products and advertisements that you might see. Make sure you decide specifically what you want to purchase and avoid deviating from that plan. In time, you'll be able to shop around in a way that isn't impulsive. But until you get better spending habits established, it's best to never deviate from intentional expenses.

4. Put Potential Purchases Through a Litmus Test

There will be gray areas that come up regarding whether or not you're being impulsive or if a purchase is actually necessary or beneficial in some way. A good way to figure that out is to come up with a litmus test in the form of a few questions that you can use to figure out whether or not you really need to spend money on something.

  1. Is there room in the budget for it?
     
  2. Is the purchase redundant (do you already have the item or something similar to it)?
     
  3. Will it substantially improve your quality of life?
     
  4. Did you want or need this item before you were made aware of its existence?
     
  5. What really made you want the item (an ad, visual appeal, need, practical use, etc.)?

These questions can help give you a clearer picture of why you might want to buy something and whether or not that purchase will benefit you in a way that justifies the amount of money needed to acquire it.

Be the One in Control

The underlying problem with impulse spending is that you end up losing control of your money. If products, services or advertisements are completely driving you to spend, then you'll never be able to stop, because those things will always be there. While it's true that those things have an informative impact (i.e. you see a product and can tell it's useful), the bulk of the decision should stem from your own needs and decisions. Thus, learning how to avoid impulse buys will go a long way in freeing up your financial situation and putting you back in control of your money. It's well worth the effort.

How do you control impulse spending? Please share in comments!

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Andrea Karim's picture

I have a lot of trouble with impulse spending, especially when I feel out of control in other areas of my life, like my career. It can be really hard to try to find the root of the emotional problems that prompt impulse spending. For instance, if I feel awful about how things are going at work, I won't necessarily IMMEDIATELY connect that to my desire to buy a $400 leather jacket.

What I try to do is look at whatever bauble it is that I want, and to ask "How will this positively change the parts of your life that most need changing?" If I can't find anything (other than my style) that will be positively impacted, I don't buy.