Control Impulse Spending and Take Charge of Your Finances

impulse spendingImpulse spending is something we’ve all done at some point. It’s that moment when you buy something on a whim, thinking it will make you happier, only to later realize it wasn’t something you truly needed. Learning to manage these spontaneous purchases is a key step in taking control of your finances and making your money work for you.

This post will guide you through understanding impulse spending, offer practical tips to curb it, and share real-life stories of how small changes in behaviour can lead to big financial impacts. Let’s take a closer look at how Emma and John, the sensible couple, handle their spending wisely, while Sarah and Mike often find themselves caught in the cycle of confusing wants with needs.

What is Impulse Spending?

Impulse spending refers to those unplanned purchases, typically driven by emotion or desire rather than a real need. It might happen when you’re walking through a store, browsing online, or even just seeing an ad on social media. You spot something you like, and before you know it, it’s in your cart, and your wallet is a little lighter.

While an occasional treat isn’t harmful, impulse spending can quickly add up. If left unchecked, it can lead to financial stress, credit card debt, and feelings of regret.

The Difference Between Wants and Needs

needs vs wantsUnderstanding the difference between wants and needs is essential to controlling impulse spending.

  • Needs are essentials
  • such as food, housing, utilities, and transportation.

  • Wants, on the other hand
  • are things that you’d like to have but could live without.
    A new smartphone when your old one works just fine? That’s a want.
    A pair of boots when your current ones still have life in them? Also a want.

The challenge comes when wants feel like needs. Sarah and Mike, for example, often confuse the two. When they’re out shopping, they tell themselves they “need” new clothes for every occasion or the latest gadget because it’s “essential.” This mindset leads them to overspend and struggle to keep their finances on track.

Emma and John: The Sensible Couple

Emma and John are a great example of how sensible living can help you avoid the pitfalls of impulse spending. They’ve mastered the art of distinguishing between wants and needs, and they’re careful with their money. Instead of buying things on a whim, they take the time to plan their purchases.

Before making any major purchase, they ask themselves, “Is this something we really need right now? Or is it something we can wait on or save for?” This simple habit has helped them save thousands over the years. They avoid emotional buying, and as a result, their finances are in great shape.

Sarah and Mike: Confusing Wants with Needs

Sarah and Mike, on the other hand, struggle with impulse spending. They’re a hardworking couple, but their spending habits often leave them feeling overwhelmed. Every time they see something they want, they convince themselves it’s a necessity.

Mike loves gadgets, and Sarah has a soft spot for fashion. If there’s a sale, they’re there, ready to scoop up deals on items they never planned to buy. Their spending decisions are often driven by emotions, such as wanting to feel good after a stressful day or keeping up with friends.

Over time, these impulse purchases have added up, leaving Sarah and Mike with less savings than they’d like and a sense that they’re always living paycheck to paycheck. They’ve realized that they need to get their spending under control if they want to reach their financial goals.

Read more about Wants vs Needs in our article The Basic Rule of Personal Finance: Needs vs. Wants

Practical Tips to Curb Impulse Spending

If you’re like Sarah and Mike and find it hard to resist impulse purchases, don’t worry! There are practical steps you can take to get your spending under control and improve your financial well-being.

  1. Make a Budget
  2. A budget is one of the most effective tools for managing your money and avoiding impulse purchases. By knowing exactly how much money you have coming in and going out, you can make more informed spending decisions.

    Emma and John follow a strict budget that outlines their essential expenses (like rent, groceries, and bills) and allocates a specific amount for discretionary spending. This way, they know exactly how much they can spend on non-essential items each month without feeling guilty.

    Need help creating a budget? Read our article How to Create a Personal Budget and Live Sensibly.

  3. Create a Shopping List
  4. Before heading to the store or browsing online, create a list of the items you need. Stick to the list, and avoid the temptation to add extra items to your cart. This simple strategy helps you stay focused on what’s necessary, reducing the chances of making impulse purchases.

  5. Wait Before You Buy
  6. One of the most powerful techniques for curbing impulse spending is the “wait it out” rule. Before buying something, give yourself at least 24 hours (or longer for big purchases) to think it over. This allows time for the initial excitement to fade and for you to consider whether you truly need the item.

    Emma and John practice this rule religiously. If they see something they like, they don’t buy it right away. Instead, they go home, think about it, and revisit the idea a few days later. Often, they realize they don’t need the item after all.

    Read the post by David Ramsey ⏰ THE 24 HOUR RULE:.

  7. Avoid Tempting Environments
  8. If you know that walking through a mall or browsing certain websites triggers impulse spending, do your best to avoid those environments. Find alternative ways to spend your time that don’t involve shopping, like taking a walk or enjoying a hobby.

  9. Unsubscribe from Sale Alerts
  10. Companies often use sales and promotions to entice you into buying things you weren’t planning to purchase. Sarah and Mike are often drawn into impulse spending through online sales and email promotions. To break the cycle, they’ve started unsubscribing from marketing emails and turning off notifications for sales. This way, they’re not constantly bombarded with tempting deals.

  11. Focus on Your Financial Goals
  12. When you’re clear on your financial goals—whether it’s saving for a house, paying off debt, or building an emergency fund—it becomes easier to resist impulse spending. Emma and John regularly review their financial goals, and this helps them stay disciplined with their spending.

    Sarah and Mike have recently set a goal of paying off their credit card debt. By keeping this goal in mind, they’re beginning to think twice before making unnecessary purchases.

Understanding Emotional Triggers

A lot of impulse spending is driven by emotions. Whether it’s boredom, stress, or the desire for instant gratification, our emotions can lead us to make purchases we later regret. Recognizing these emotional triggers is key to breaking the cycle of impulse buying.

  1. Boredom Buying
  2. One of the most common reasons people make impulse purchases is boredom. When there’s nothing else to do, shopping can feel like a quick way to pass the time or add excitement to the day. However, this type of spending is often wasteful and leaves you with items you don’t truly need.

    Emma and John combat boredom by finding productive ways to spend their free time, such as exercising, reading, or working on home improvement projects. These activities not only keep them engaged but also prevent them from feeling the urge to shop out of boredom.

  3. Stress Spending
  4. For many, shopping can be a way to cope with stress. Whether it’s a tough day at work or personal struggles, buying something new can provide a temporary boost in mood. But over time, stress spending can lead to financial stress, creating a cycle that’s hard to break.

    Sarah and Mike often fall into this trap, buying things to “treat themselves” after a long week. To combat this, they’ve started exploring healthier ways to relieve stress, like going for a walk, meditating, or talking with friends.

Building a Sensible Spending Plan

At the heart of curbing impulse spending is the idea of sensible living—making small, practical changes to improve your financial health. Here’s how you can create a spending plan that aligns with your goals.

  1. Prioritize Your Needs
  2. Start by making a list of your financial priorities, such as rent, utilities, groceries, savings, and debt payments. These are your essentials. Once you’ve covered these, you can allocate a portion of your budget to discretionary spending—things you want but don’t necessarily need.

  3. Set Spending Limits
  4. Emma and John set clear spending limits for non-essential purchases each month. They give themselves a small amount of “fun money” to spend however they like, guilt-free. By setting limits, they enjoy the things they love without compromising their long-term goals.

  5. Track Your Spending
  6. It’s important to track where your money goes each month. Sarah and Mike were surprised when they started tracking their expenses and saw how much they were spending on non-essential items. By using a budgeting app or a simple spreadsheet, they now keep a closer eye on their spending and make adjustments as needed.

The Long-Term Benefits of Managing Impulse Spending

The benefits of curbing impulse spending go far beyond your bank account. Here’s what you can expect when you take control of your spending habits:

  • Less Financial Stress:
  • With fewer unplanned purchases, you’ll have more money for the things that matter most, such as savings and paying off debt.

  • More Financial Freedom:
  • Over time, the money you save from cutting down on impulse purchases can be put toward your bigger financial goals, giving you greater freedom and flexibility in the future.

  • A Sense of Control:
  • By being mindful of your spending, you’ll feel more in control of your finances and less reactive to emotional triggers.

Final Thoughts

Impulse spending is a common challenge, but with a few small changes, it’s possible to overcome it and build a healthier relationship with your money. Emma and John’s sensible approach to spending has helped them achieve their financial goals, while Sarah and Mike are learning that by recognizing their triggers and setting limits, they can get back on track.

Disclaimer for ManageYourMoney.ca

The information provided on ManageYourMoney.ca is intended for educational and informational purposes only. It should not be taken as financial advice. The opinions shared are those of the authors and are meant to encourage sensible financial habits and decision-making. We recommend that you do your own research or consult a certified financial advisor before making any financial or investment decisions. All investments come with risks, and there is no guarantee of success. Past performance is not a reliable indicator of future results. Always consider your personal financial situation and risk tolerance before pursuing any investment opportunities.

As always, I am not a qualified financial advisor. I just relate financial management to my own experience which may not resemble yours at all. Advice is frequently worth exactly what you paid for it. Most of mine came from expensive experiences.

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