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Impulse purchasing is the practise of spending money without having time to fully consider the consequences.
Two journals published recently by the Open University Business school, using data from the BBC Big Money Test, have revealed some interesting facts about the psychology behind impulse buying.
The studies showed that the groups that are most likely to spend impulsively are groups who are traditionally lower earners, including women, young people, and members of the working class. However, it also showed that higher earners are at risk of spending without proper reflection. Those who are highly emotionally sensitive sometimes use shopping, especially impulse buying, to make themselves feel better.
The research suggests that the ability to control your impulse buying is more important to making ends meet than income, education, social class and financial savvy combined. That means even if you are well educated and highly paid, you will still struggle to pay your bills unless you can get your impulse buying under control.
Before making any purchase at all, especially one that has only just occurred to you, take some time to think about your bank balance, think about what you want to save up for, think about all the other things you could spend the same money on, and ask yourself if you really do want to buy it.
No Purchase is Too Small to Matter
It's tempting to think that small purchases, less than a pound for example, cost such an insignificant amount of money that it won't have an effect on your finances. However, it's not the amount you spend that's important, but the manner in which you spend. Over time, insignificant purchases build up, and if you don't break the habit, you will find that the amount you are spending becomes significant after all.
Impose a Cooling Off Period
Carry around a notepad, or use a smartphone app, and every time you see something you want to buy, write it down. Then wait at least 24 hours before making the purchase. In 24 hours, you may decide you don't really need it after all. If you still want to buy, you don't have to return to the shop, look online to find the best price available. Even if it's something small like a bar of chocolate or a pack of gum, write it down and make yourself wait. If you still want the chocolate bar the next day, then buy it. If it's something you feel you need, maybe a kitchen tool or a new watch, writing it down means you won't forget about it, and you may find it somewhere cheaper tomorrow.
Personal Finance Software
A terrific advantage of using home finance software like Money Dashboard to manage your money is that you can directly see the impact your spending has on your finances. The automatic tagging will group different types of spending, and you'll quickly be able to see how big a portion of your total spend goes to each category in easy to read, colourful charts and graphs. You might be surprised by just how much impulse purchasing eats into your budget.
Find Another Happiness
If you're the kind of person who thinks I've had a rough day, buying some new shoes will cheer me up, then you need to disconnect ‘spending' and ‘happiness' in your head. Find something else that makes you feel happy, and every time you get that urge, do that instead. It might be sitting down for five minutes and thinking about your loved ones, or it might be putting on your favourite jumper and having a cup of tea in front of the television. Whatever it is, make it something you can enjoy over and over without spending money, and you'll be able to save for something else.