Personal Finance » Spending

Impulsive spending can derail your finances

“When you dance, your purpose is not to get to a certain place on the floor. It’s to enjoy each step along the way.” – Wayne Dyer

We live in a society that not only provides us with a myriad of opportunities to spend but which also gives us an abundance of ways to spend money we haven’t even earned yet. In the “good old days”, when you paid for almost everything with cash and credit was a shameful thing, people saved for the things that they wanted and simply went without the things they couldn’t afford.

As credit became more readily available and carrying debt became more socially acceptable, people’s buying habits changed. Today, instead of making deliberate choices about what we’re buying, our spending tends to be more spontaneous and impulsive; driven by sales, promotions and limited-time offers. Consequently, money management has become less about living within our means by balancing spending and saving and more about managing credit limits and payments so we can have everything we want right away.

Define “bargain”

As a teenager, my Dad would routinely drive me crazy by insisting that every “bargain” I brought home really wasn’t. His perspective on my amazing deals was that if I hadn’t gone into the store with the intention of buying what I’d walked out with then it wasn’t a deal, it was simply extra spending. It didn’t matter how much I insisted that the chance of getting whatever it was at a vastly discounted price justified the purchase he couldn’t be persuaded to see things from my perspective. Now, as an older and wiser version of myself, I’m forced to admit that Dad had it right all along. No matter how great a deal something might appear to be; if you hadn’t planned on buying it, then making the purchase might cost you more in the long term, especially if you need to use credit.

Delayed gratification

The simple fact is that spending is often a lot more fun than saving. Saving requires discipline because you’re dealing with delayed gratification which, as far as the average human brain is concerned, is not gratification at all. Retailers are very aware of the fact that our brains are hard-wired for pleasure and that the anticipation of pleasure is even more powerful than the pleasure itself. All a retailer needs to do is market a product in a way that inspires our brain to start thinking about all the ways that product will enhance and improve our lives and there’s a good chance that we won’t be able to walk away from the sale, especially if it’s a limited time offer.

Impulsive spending

In the same way that chips and cookies can derail a healthy eating plan, impulsive spending can undermine your best wealth building plans. Impulsive spending is the junk food of money management; indulging once in a while won’t do you too much harm but allow it to become a habit and it has the ability to seriously impact your financial health. At the end of the day, you work hard for your money and you’re entitled to enjoy it; the trick is to choose to indulge in the things you truly enjoy and to make a conscious choice to ignore other temptations no matter how attractively they’re packaged. For me, travel and good food make me especially happy and I’m more than likely to spend less money on clothes and shoes in order to be able to travel more and indulge in a great meal out once in a while. Knowing that not buying that “bargain” outfit will allow me to take a trip back to Ontario a little sooner makes it easier to resist the deal.

Give your money purpose

Giving your money a purpose is always a good idea because unpurposed money tends to drift away when you’re not paying attention to it. Making conscious decisions about your splurges and choosing to indulge in those things that really give your pleasure rather than giving in to the marketing ploy of a company intent on selling you the illusion of pleasure means that you get to enjoy your money much more without derailing your goals in the process. Why not take some time this week to analyze how reining in your impulsive spending might free up a little extra “fun money” that you can spend on the things you really enjoy without the guilt?

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