Impulse Spending or Over Spending? Where do you fit?

thumb12.jpgDoes your spouse or partner complain that you’re spending too much money? When your credit card bill arrives, are you surprised to you find that you charged more during the month than you thought? Does your closet contain lots of shoes or clothes that you almost never wear? Do you own every gadget known to man (or woman)? Do you come home from the mall with items you had no intention of buying? Do you spend money on things that you didn’t realize you needed until you saw them on display in the store?

If you answered yes to any of these questions, you probably suffer from impulse spending. When people are unable to save money for the things that are really important to them, like a house, a new car, a vacation, or retirement, impulse spending is often the culprit. If you don’t have specific financial goals, it’s more difficult to resist spending money on items that don’t really have any meaning to you.

Once you’re already saving regularly towards your most important financial goals, you may want to have a fund to use specifically for occasionally spending money on unplanned items. Then you can indulge in occasional impulse spending without jeopardizing your financial future.

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Impulse spending, or recreational shopping, can put a strain on both your finances and your relationships. To overcome the urge to spend money, learn to recognize your needs from your wants. We’re constantly bombarded with messages from advertisers who appeal to our psychological needs to tempt us into spending money on things we want but may not need. Allow a cooling-off period before spending money on anything you haven’t planned for in advance.

One method of controlling your spending that works well is to carry an index card in your wallet. When you see something you want to buy, write it on the card. Force yourself to wait two weeks (or any other period of time you set for yourself, but at least a week) before spending the money on this item. During this cooling off period, if you see something else you want, add it to the card. However, you can never have more than three items on the card at any one time, so to add a fourth item, you have to remove one of the other items from the list. If you’re an impulse spender, you’ll find that you’re frequently crossing items off to make room for the newest “must have” thing.

Another good rule to adopt is to pay cash whenever possible. When you go shopping, leave your credit cards at home. Most impulse spenders use credit cards more often than not. When you use credit cards, the reality of the amount of money you’re spending and how you’re going to come up with that money, is suppressed. When you pay with cash, it feels like you’re spending “real” money.

Learn to recognize wants from needs, and practice controlling your impulses to spend your money on things you don’t really need, and you’ll be able to change your spending habits and end up far ahead financially.

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9 Responses

  1. Anna says:

    “When you go shopping, leave your credit cards at home”

    That applies to Debit cards as well! If you are anything like me and never carry cash around, then it’s just as easy to fall into the trap of impulse spending on your debit card – I’m one of those people that will go shopping with a specific purpose in mind and then come home with everything else under the sun except for what I went shopping for in the first place, lol.

  2. Robin Bal says:

    Hi Anna,

    I leave my credit cards at home but carry one debit card and I know the limit on my debit card so its kinda safe.

    I used to be one of those who would buy whatever I wanted, price didn’t matter, as long as the credit cards had enough credit I would just swipe it…lol, I have changed a bit in the past. Just trying to practice what I preach. 😉

    Take care and Cheers.

  3. Daniel says:

    I might try that index card in the pocket. Great post. 😆

  4. Robin Bal says:

    Hi Daniel,

    Glad you liked the post mate, honestly it doesn’t take a lot to have some financial discipline. I learnt it the hard way though.

    Take care and Cheers

  5. Sharon says:

    This has been the story of my life before I met my hubby. I made executive wages so money was in the category of “quite expendable”. It wasn’t until I met my husband that he got me on a couple of really neat things, such as

    “Do I really need another pair of shoes? This is going to our children’s education fund….”

    :)

    Or even just paying my credit card at the end of each month to save on interest fees.

  6. Robin Bal says:

    Hi Sharon,

    Thanks for your visit and comment. Having an expendable income is really a good enough reason to over spend mate. If you go by your wants there is really no end to impulsive spending.

    And credit cards if you just make minimum payments, it takes ages to clear up your balance. Credit cards attract the highest interest.

    Take care and Cheers.

  7. Sharon says:

    Since then, I couldn’t have imagined then that all the small changed have become considerable savings.

  8. Angela says:

    I’m an impulse spender! It’s bad. My closet is full of clothes with tags still on them. 😳 BUT, I pay off almost my whole credit card balance each month.

  9. Robin Bal says:

    Hi Angela,

    Paying off your whole credit card bill each month doesn’t necessarily mean you are on the right track mate. Focus on needs and not wants.

    Take care and CHEERS

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