You have big financial goals and dreams and you work hard to achieve them. You earn an honest living, plan for your future, and try to make the best decisions for you and your family.
And while you’re putting in hard work and trying to stay disciplined, pesky struggles can continue to drag you down and hinder your progress. A very common financial struggle Americans face is impulse buying. This difficult habit is characterized by emotional spending, overspending, regretting and hiding purchases, getting behind on regular bills, and more.
A survey from 2022 estimated that 73% of respondents admitted to most of their purchases being spontaneous and spent an average of $314 per month on impulse purchases. There are many reasons why shoppers buy impulsively. Some consumers are concerned about their image and others have a difficult time controlling their emotions.
The psychology of impulse buying is fascinating and understanding it is crucial to mastering your spending and overcoming impulse buying.
Understanding and Overcoming Impulse Buying
If you’re frustrated with feeling like you never have enough money each month or it feels like you’re swimming in mud to reach your financial goals, then it’s time to discover where impulse and emotional spending might be hindering your progress.
Psychological Reasons for Overspending
Evaluating your specific reasons for impulse buying is key to discovering strategies that will help you overcome your spending habits. These are common reasons consumers overspend:
- Our emotions are powerful. Our feelings can have a major impact on our spending. When we feel sad, bored, scared, or worried, we often seek out a dopamine hit to make us feel better. Retail therapy can help distract us from our emotions and reinforce a sense of control when we’re feeling overwhelmed.
- Marketers know what they’re doing. Businesses understand the psychology behind impulse and use it to boost their sales through urgent and persistent marketing. Phrases such as “limited-time offer”, “2-day sale only”, or “low-inventory” can lead consumers to make purchases simply because they don’t want to miss out.
- Spending money is really easy. Swiping credit cards or scanning your phone to pay for purchases creates a disconnect between buying an item and understanding the impact the purchase will have on your finances. It also makes consumers spend more money than if they were using cash. And the prevalence of shopping online has made it easier than ever to mindlessly spend.
- We’re constantly being influenced. Social media has made our modern-day impulse-buying fight extremely difficult. Not only does watching other people showcase the best of their lives make us feel worse about ourselves, but we’re constantly being exposed to the latest and greatest products and services everyone is using. Consuming targeted advertisements and influencers’ content leads us to make purchases we never originally intended.
Consequences of Impulse Buying
Impulse buying and emotional spending can wreak havoc on your finances. It can lead you to rack up high-interest credit debt that can put you in a vicious cycle. It can also inhibit you from your big financial goals such as buying a home, traveling, or retiring comfortably. Continually saying “yes” to your desires today forces you to say “no” to your future self.
Impulse buying can certainly make you feel better in the short term, but oftentimes, consumers end up feeling “buyer’s remorse” and end up feeling worse than they did before the purchase. If you’ve tried to cut back on impulse buying in the past but continue the habit, you can spiral into a cycle of guilt and shame.
Impulsive shopping habits can also lead to a cluttered home very quickly. Because the purchase was unplanned, it typically means there wasn’t a legitimate need (or space) for the item in your home. Clutter can increase your stress levels and make it harder for you to focus on necessary aspects of your life (such as your finances).
From Impulse Buying to Mindful Spending: Strategies to Implement
Once you’ve spent some time thinking about why you tend to impulse buy, it’s time to implement strategies to help you break your habits and master your spending!
- Make shopping more difficult. As we mentioned, credit cards make it really easy to make impulse purchases because we don’t have to count up your cash or even check your bank account first—you just swipe! Try leaving your credit cards at home when you know you’ll be in high shopping temptation spots—you’ll most likely forget about anything you saw once you get home. Removing your saved credit card information from common websites (hey, Amazon one-click) can create a barrier to online shopping. You may realize the purchase isn’t worth going to grab your wallet.
- Implement a 24 or 48-hour rule. Delaying a purchase can create a distance from that immediate feeling of I-have-to-have-this-now when you stumble upon a purchase. Having a concrete rule such as waiting 24 hours can help you fight against your emotions and give you time to ask yourself questions such as:
- Do I really need this?
- How will this item positively affect my life?
- Am I experiencing negative emotions such as stress, sadness, etc?
Check in with yourself and honestly evaluate if you’re trying to fill an emotional void. Ask a friend for accountability if you need to. Remember, this is a very common struggle!
- Create and stick to a budget. A budget can play a huge role in mindful spending. It’s like having a navigator in your passenger seat providing you with directions regarding where you can and can’t shop. And while it may sometimes feel like he’s being demanding and controlling, you’ll thank him when he gets you to your financial goal destination.
Your budget doesn’t have to include essentials only—fun experiences, food, entertainment, and clothing can all be reasonably accounted for in your budget. When these purchases become planned instead of impulsive, you can feel released from negative emotions such as guilt.
Mindful spending won’t happen overnight, but it is possible to break the cycle once you understand the psychology behind it.
Master Your Spending with Five Pine’s Help
At Five Pine Wealth Management, we welcome honest and raw conversations about your financial struggles because we know that understanding the psychology behind your financial choices has a major impact on your future success. We’re here to help you figure out how to overcome obstacles, manage your finances, and invest in your future.
For more information about how we can help you master your spending, send us an email at firstname.lastname@example.org. We can’t wait to hear from you!