You know the moment. You're in the store (or maybe you're shopping online) and you see those words, "All summer apparel 60% OFF!" It's not long before your cart is filled with numerous clothing items! Or you're grocery shopping while hungry and get home to find that you purchased quite a few unnecessary food items simply because your growling stomach condoned the purchases. I think it's safe to say that we're all guilty of making an impulse buy...or two or three.
Now, one impulse buy might not seem like a big deal. (Unless you impulsively buy a boat or a car.) But, when those seemingly small, insignificant impulse purchases continue, they start to really add up. A 2018 study showed that the average U.S. consumer makes three impulsive purchases every week. Look at this on a yearly scale and things start to get scary. These three purchases per week add up to about $5,400 spent impulsively every year.
Study participants revealed that the biggest culprit for impulse spending was food, with impulsive clothing purchases following close behind. Many of the participants admitted that the impulse spending was often in response to a deal or discount. That just goes to show that, while sale prices can help us save money, if they are encouraging us to impulsively buy things we don't need, then we are no longer saving money. Instead, we are throwing away our hard earned cash.
What if we took charge of our spending and replaced that impulsivity with some serious intentionality? What could we accomplish with our money then?
To answer this question, let's take another look at that $5,400 spent impulsively every year.
Let's say a 2017 college graduate is reading this post and decides that he is going to be really intentional with his spending. Rather than spending impulsively, he wants to pay off his student loans. (The average 2017 college graduate with a bachelor's degree graduated with just under $30,000 worth of student debt.) By intentionally reallocating that money, he could pay off his student loans in about 5 years, saving thousands in interest! (The average pay off time for student loans is 19.7 years, and the amount of interest you pay during those two decades is insane!)
Let's say a 30-year-old is reading this post and decides enough is enough. No more impulsive spending. If that 30-year-old took her $5,400 every year and put it into her Roth IRA or 401K, she could retire at the age of 67 with more than $1.5 million. (Maybe you're not 30, but you're 50 instead. That's still an extra $240,000 in your retirement fund.)
We've all done it. We've made purchases hastily without pausing to consider whether we really need that item or not. So, here's the important question: how can we avoid impulse spending?
Make a plan.
Go to the store with a list in hand, and stick to your list! If you prefer online shopping (and having your items delivered right to your doorstep), be sure to use a list for that too. When you have a plan, you tend to spend less and save more...and avoid impulse buys!
Sleep on it.
I can't tell you how many times the items in your cart lose appeal by the next morning. If you have your online cart filled up, close your browser. Close it NOW. Wait until the next morning to make your purchase. That gives you the night to think about whether or not you really need those items. (Side note: If you are a parent of a newborn, I'm telling you...do NOT submit that Amazon order at 2am. No one thinks logically at 2 in the morning!!)
Stop and think.
When you're about to head to the check out line (or you're going to click the 'submit order' button), stop yourself and think. Do I need everything that's in my cart? Think about what you already have at home. Are there things in your cart that you don't really need or things you are on the fence about? If you're not sure you need something, put it back! You can always return to that store (or that website), and purchase the item later if you come to the conclusion that it is something you actually need.
Delete retailer emails or unsubscribe altogether.
You know those emails I'm talking about. They come with catchy subject lines like "Biggest sale of the season: BOGO 60% off TWO DAYS ONLY" and "THIS IS IT. Your 20% off coupon ends today." Make a point to avoid opening these emails. Either delete the emails or unsubscribe from the retailer's mailing list altogether. If you open those emails, chances are good that you will quickly find yourself browsing the retailer's website. Soon your cart will be filled with goodies that you had no intentions of buying until you opened that email. Don't shop when your email tells you to shop. Instead, shop when you have something you need. (And, trust me, retailers are ALWAYS running some sale or another. I'm sure you can find a discount code to use when you need one.)
Plan your splurges.
Splurges are ok. In fact, they're kind of important. Even throughout our journey to become debt free, we allowed ourselves a splurge here and again. Why? Because having those small rewards on occasion made it easier to sacrifice all of the other times that a splurge wasn't in the budget. And splurges were rarely in the budget at that point! Just remember, splurges are ok as long as they are in the budget. It's when splurges aren't planned (and aren't in the budget) that they become impulse buys that negatively impact our financial plans.
Keep your goals in mind.
I mentioned above that you should stop and think before making purchases. When you're thinking about a purchase, don't forget to consider your goals. (You know, that fully-funded retirement account, that vacation to the beach, that opportunity to serve on a overseas mission team, etc.) Weigh your purchase against your goals. Will making this purchase delay you achieving your goals? Is there something that you're saving for that this money would be better used towards? Consider your goals before making purchases!
Today is April 15 - tax day. That means many U.S. consumers (about 70% to be exact) have already received, or will soon receive, a tax refund. In 2018, the average tax refund was just over $2,800. That's not a small amount but it's easy to quickly spend that refund without giving it a second thought!
So, here's my challenge for you...
If you are one of the many Americans who is receiving a refund this year, I want you to take that refund and not touch it for at least one week. (If you don't have the self control to leave it alone, then dump it in your savings account where it's not so easily accessible.) Let it sit while you very thoughtfully consider how that refund might best be used. If your married, have your spouse thoughtfully consider this as well and then come together and have a discussion. Rather than impulsively spending that refund, be intentional and make a plan for your money. Take that time to dream and consider your goals. Whether being intentional means paying off debt, choosing to splurge, or saving for retirement, making a plan for your refund before spending means that you're putting your money to work for you and your goals!