As children, we start to learn the difference between needs and wants.
You need food, but you want the latest toy from the shop. It seems like a fairly straightforward contrast, but maybe it’s not so simple. After all, we are faced with multiple spending decisions every day, and some are seemingly harder to avoid compared to others.
So, how can you avoid impulse spending, and what kind of tactics are retailers using to try and pry your savings from your bank account? We’ve rounded up a few ways that might help you avoid impulse spending next time you start feeling the urge.
1. Wait 30 days before buying anything that’s more than a certain amount
How much harder is it to fight the urge to spend when there is a sale on something you kind of want? The cheaper price can sometimes justify your decision to buy then and there, before the feelings of regret can make you wish you didn’t.
You don’t necessarily need to wait an entire 30 days, but the concept of waiting before you shop allows you to have a clear head and can help you put more thought into your decision to buy — especially for larger, one-off purchases.
2. Only use cash
While mobile payments and the ease of shopping online could make this tip a little redundant for some of us, changing your behaviours can assist with impulse spending.
When it comes to your weekly shop or discretionary spending on items such as a coffee, using cash over card can have advantages.
Studies have found those spending with cash spent 18% to 35% less compared to those who use cards. The act of physically handing over money, rather than a simple tap-and-go, means you see how much you spend in real-time.
3. Make a list
Writing a list of things you’d like to purchase over the coming months can be a great way to prioritise upcoming spending. Rather than buying anything you want, when you want, making a list can allow you to include both your needs and wants.
This means you can decide what you need to (and want to) purchase next, rather than impulse spending on items you didn’t really need, which can end up forcing more important purchases until even later.
In addition to your list, you can also set up a savings account specifically for your upcoming purchases. This might make it easier to know when you can afford any items on your list, as well as being able to re-order the list if your priorities or your situation changes.
4. Assess your use of “buy now, pay later” providers
This one’s a doozy. You’re short for cash but need (want) to buy that new something. Imagine if you could have it but didn’t need to stump up any cash for the next fortnight, and even then, you only have to pay a quarter of the total price. You’re sold! But along with it comes the commitment to your future-self of fortnightly payments for the next eight weeks.
Afterpay and other “buy now, pay later” providers can enable impulse spending, especially for those who might not be able to afford the purchase in the first place.
If you have better cash flow management skills and using fortnightly payments helps you achieve this, no problems; just make sure you don’t get too carried away.
If using a “buy now, pay later” provider to purchase, consider if you could pay upfront, would you? If the answer is no, why are you still making the purchase for the same amount (just spread over a longer timeframe)?
