Money Management: Rein in Those Impulse Purchases

By Dawn Handschuh, Personal Finance Writer Archive

Opportunities for impulse purchases often trip up the best-intentioned consumers. The trifecta of rising energy, food, and healthcare costs has many Americans vowing to rein in spending — but old habits die hard.

That's because shopping culture is ingrained in American society. Besides the endless proliferation of retail outlets, you can shop online or on TV, 24/7.

Advertising bombards and surrounds us — when we read a magazine, catch a movie, listen to the radio, ride a bus, buy groceries, pump gas, drive on highways or fly on an airplane.

At their core, impulse purchases are an attempt to boost self-image. Our purchases have gone beyond the essentials to making a statement about our tastes and lifestyles. Visit a mall on any weekend, and you'll find entire families who can kill a day by shopping, eating and browsing as a leisure activity. But excess spending can wreck personal finances.

One study showed that people who exercise self-control in some way, like dieting, tend to make more impulse purchases, perhaps because humans can take only so much deprivation. According to this study, you should avoid shopping when you start a new diet or workout program.1

Impulse purchases make up nearly 40% of all money spent online.2 And according to a Stanford Business School study, even a single, small purchase can trigger "shopping momentum," where the sheer act of shopping opens the floodgates to further purchases.3

Use these techniques to avoid impulse purchases:

  • Don't justify purchases by saying, "I've earned it" or "I deserve it."
  • Wait 48 hours before a purchase; often, the perceived need will fade.
  • Don't enter stores without a list of what you need and a budget that sets a spending limit.
  • Limit shopping expeditions; avoid malls.
  • Get in and out of stores quickly.
  • Separate "needs" from "wants."
  • Pay in cash. Psychologically, seeing money leave your hands does more to limit spending than waving a credit card.
  • Become aware of what emotions trigger your impulse spending, and find alternatives to spending.
  • Tuck a list of your financial goals in your wallet, and re-read it before any purchase.

Footnotes

1 "On a Diet? You'll Spend More on Impulse Purchases," Journal of Consumer Research, March 7, 2007
2 "What Causes Customers to Buy on Impulse?" User Interface Engineering
3 "Buyer Beware: Shopping Can Lead to More … Well … Shopping," Stanford Graduate School of Business, September 2007