Impulse spending — we’re all guilty of it. Whether it’s that dopamine-pumping new tablet or a delectable Harvey’s combo, we all experience a little rush when we buy something that makes us happy.
A treat here and there isn’t going to make or break your financial health. But if your impulse spending has you shelling out $20 a day on specialty drinks from Starbucks or a monthly $500 on the latest new tech? Unfortunately, your buying habits could be standing in the way of you reaching your financial goals.
Credit Canada is always here to help with 100% free, confidential, non-judgmental credit counselling services from our certified credit counsellors. In the meantime, let’s explore what drives us to impulse spend and how we can keep it at bay.
1. Know yourself and your triggers.
Where do you tend to spend the most money? Let’s say it’s Amazon. Maybe you don’t really need that Prime Account anymore — consider whether the savings are worth all the additional impulse spending you’re doing. You might even consider switching grocery stores if your Walmart hauls continue to include extra items that weren't on your grocery list.
Those are locational triggers, but what about the emotional ones?
Think about your state of mind when you make impulse purchases. If it usually happens during periods of stress, it might be time to replace that coping mechanism with another activity. You could consult a doctor for more effective ways to deal with stress. Maybe your trip to the mall to blow off steam turns into a phone call with Mum or a 20-minute jog.
One study showed that underneath impulse spending usually lie issues of low self-esteem, high stress, and anxiety disorders. If you can uncover the mental health issues behind your impulse spending, you could treat the issue properly with medical advice and treatment.
2. Pause — for at least 24 hours.
Does that $1,000 new HD TV really seem as amazing after you get home and realize you still have a lot of other expenses to cover this month? Suddenly, your 50-inch TV from three years ago seems just fine. The same goes for impulse fast food buys or seasonal knick-knacks. Unless it’s a matter of health, there’s rarely any product or service that you absolutely need to buy the second you see it.
All you need to do is wait.
You’d be surprised how much the glow of an expensive product dims after 24 hours. Sometimes we advise clients to even take a week to think about a making a purchase. In that time you might conduct some research or peruse product comparisons to look for a cheaper option that still meets your needs. And if you make a purchase after all that? It’s not an impulse buy because you took the time to consider whether you actually needed it.
3. Create a budget.
Studies show that people tend to spend less money if they have a budget.
That’s enough reason to create one, but the benefits are even more abundant. Budgets help you feel more in control of your finances. It feels good to stay on track with your budget, so you won’t feel the same dopamine kick with an impulse buy as you would without a budget.
Why? Because you’ll feel guilty!
All that time noting down your income and expenses to create your budget won’t be as fruitful if you smash it and buy the latest iPhone.
If you don’t know where to start, Credit Canada has you covered. Our Budget Template + Expense Tracker has placeholders for every potential spending category you can think of — all you need to do is plug in some basic information and start tracking your expenses. The template does the rest for you, letting you know when you’re over or under budget, and how your spending compares to general spending guidelines.
4. Set short- and long-term financial goals.
Financial goals can be short-term (within the year) or long-term (within the next 5-10 years). It’s easy to think: I want to pay off my debts and have financial security. That’s a reasonable goal to have, but it’s nowhere near specific enough to make it attainable.
Your financial goals offer you a light at the end of the tunnel. They help you understand the motivations behind budgeting or saying no to impulse spending, which makes it easier to practice good habits.
Let’s turn “pay off debts” and “financial security” into more specific SMART goals (Specific, Measurable, Attainable, Relevant, and Time-based).
How about:
- Pay $400 per month toward credit card debt for six months to bring the balance down to $2,000 (short-term).
- Set aside $100 per month for my child’s RESP for the next 18 years (long-term).
Setting goals will help you practice more mindfulness at the shopping malls or when you're online.
5. Be more mindful and avoid “browsing.”
Don’t worry; you won’t need to assume the lotus position in the middle of the store. It’s really a mental game here. We discussed a 24-hour pause before making a purchase. Sometimes, it just takes a few minutes in the moment.
Your meditation could consist of simple questions to answer before waltzing over to the checkout line:
- Do I truly need this?
- Does the price tag fit well with my budget?
- What value will this item bring to my life?
- Will I need this tomorrow, or do I just want it today?
Just answering these questions within 5 minutes leading up to a purchase turns your impulse spending into mindful spending.
BC-based finance writer Cait Flanders describes mindful spending as knowing the purpose behind your spending. According to Flanders, this technique eliminates a common shopping behaviour: browsing. Sound familiar? It’s quite shocking how much we actively search for reasons to spend money without there being any!
More Tips to Curb Online Spending
Here are a few more ways to control your impulse spending:
- Get an accountability partner. This could be a sibling, spouse, friend, or parent. Bring them along with you on shopping trips to make sure you stick to your list and don’t buy anything unexpected.
- Clean out your email inbox. Unsubscribe from any promotional emails that might tempt you into going on an online shopping spree.
- Be kind to yourself. Shopping isn’t the only way to make yourself feel good. Find more ways to be kind to yourself, including spending time with loved ones, indulging in hobbies, or getting back into your fitness regime.
- Automate your savings. You can talk to your bank about setting aside a predetermined amount of money into a savings account each month. This will help you feel secure as you watch your emergency fund grow, leaving less leftover for you to spend frivolously.
- Talk to a doctor. Find out if any underlying mental health or physical health issues are contributing to your impulse spending.
Curb Impulse Spending with Support from Credit Canada
Impulse spending can ruin your sense of financial security and worsen your debt levels. Financial goals, mindfulness, and budgeting are great ways to minimize the disastrous effects.
But if you need additional support, you can rely on Credit Canada for free credit counselling services. Our certified credit counsellors can help you map out a budget and assess debt relief options to make you more confident about your finances. Our goal is to get you out of debt and back into life.
Talk to a credit counsellor today!
