Are you a shopaholic? Do you spend lots of money on unnecessary items? Here are 14 tips to help curb your spending and stop impulsive buying!
Have you ever been to the mall to purchase some essentials and ended up in the clothing section, paying for a new dress that was not even on your shopping list? If you're nodding in disbelief, then don't worry - you are not alone.
This type of unplanned shopping is called impulsive buying. In fact, a study conducted by the Point Of Purchase Advertising International (POPAI) in 2014 revealed that 82% of purchases are made at the store, a jump from 76% in 2012. That's not all. Can you believe that during the Covid-19 pandemic, especially in 2020, impulsive spending increased by 18%!
This essentially proves the extent of people's impulsive purchase decisions for instant gratification. Well, easy access to millions of online stores does not help in this matter. Imagine how much money you could have saved if you just resisted yourself! Let us give you an easy example.
We all love to Zomato food once in a while, right? But if you order food from outside once/ day, with average spending of 300 per meal, you're actually spending ₹9,000/month, and that's ₹1,08,000/year. Instead of spending this money on food, if you had invested this amount per month in a SIP, you could have made over ₹20,91,052 in 10 years at 12% interest!
That's the power of compounding. Mind-boggling, right? Well, the good part still remains in the fact that this kinda money is still in the grasp of your hand. All you have to do is save this hard-earned money by tweaking your current lifestyle.
But that's advice for another blog; for now - let's dig deeper into impulsive buying.
Are You Truly in Control?
Fun Fact: For your impulsive buying and unplanned or excessive spending, you can blame Austrian architect Viktor Gruen. In the 1950s, he designed a shopping mall in Minnesota to get shoppers bamboozled by various colors, lights, and attractive displays. This essentially lured and seduced them to make impulse purchases. That's how the Gruen Effect came into life. Even today, marketers are leveraging Gruen Effect to increase their sales.
Over the years, psychologists have studied purchasing decisions and come to the conclusion that people impulsively shops for three key reasons:
This is a significant reason why people shop impulsively. Nothing could make you feel better than a new thing if you had a stressful day. Although the happiness you get from the purchase is short-lived, the sheer pleasure it brings into your mind is insanely powerful. This is what we call instant gratification.
Fear of Missing Out (FOMO)
Have you ever seen an empty shop with a board saying 'Buy 1 Get 1 Free' or '60% Off'? No, right. Sale boards attract customers like moths to a flame. You know that the same shampoo will be on sale again in a few months, but you still buy it thinking, 'what if it doesn't!'
Also, the psychology where you feel you are getting more with less money is what makes you pick up items you may not need immediately. It's all about FOMO.
The tendency to stockpile
Remember the urge to shop when you get a pop-up of a 50% sale on Myntra, resulting in instant browsing and buying [whatever the offer is on]? Well, that's what this point is all about.
In such scenarios, your brain gets fooled by the fact that the sale or the stock is available only for a limited time. So, you end up restocking or buying items impulsively that you may or may not need.
Why Impulsive Buying is A Problem?
Did you know that Compulsive Buying Behavior (CBB) is a psychological disease known as shopping addiction? It makes you excessively and impulsively purchase despite severe psychological, social, occupational, and financial consequences.
Impulsive shopping can affect your financial health in the long term and short term. If you shop using your credit card, imagine the hefty bill waiting for you at the end of the billing cycle. And if you choose to pay only the minimum amount, you risk paying more due to the high-interest rate. Also, don't forget the post-impulsive purchase guilt and stress.
Don't worry. We will help you to cope with impulsive buying and curb your spending. Keep reading!
Stop Yourself From Making Impulsive Purchases & Save Money
Don't let retail therapy wreak havoc on your financial and social health. Here are some tips for a healthier money life that will keep impulsive shopping sprees at bay.
Prepare a budget
Before preparing your shopping list, decide on the budget for all your expenses for the month. Better create a priority list:
- Priority 1: Fixed monthly expenses (50% of your salary) - Rent, grocery, utility bills, EMIs, kids' school fees, fuel.
- Priority 2: Investments - Save at least 30% of your salary on your savings like SIPs, recurring, insurance premiums, emergency funds, vacation funds, etc.
- Priority 3: 20% of your salary you can keep aside for your pleasure.
Based on this priority list, you can set your budget. You can create this list on a personal budget app. These kinds of apps can keep track of your spending. Having a reminder in front of you can be beneficial to track where you are splurging.
Create shopping list
Before shopping, prepare a list of things you need to buy. It can be for groceries, holiday gifts, or updating your wardrobe. Challenge yourself to stick to the list.
Of course, there will be things you realize you need when you are at the store. But before adding it to your cart, think, do you need it, or is it another impulse?
Follow a waiting period
Set a waiting period for yourself before you make the purchase. It can be a few hours or months. Use this time to consider whether this is a necessity or just an impulse. During this time, you can go to the store to check the price and compare it with sellers online. You may even find a better deal and end up saving money. But purchase only when the waiting period is over. Don't give in to the temptation. We know you can do it!
Pay in cash
It is probably the most practical approach to curb impulsive buying. Bring only the exact amount of cash you think you may need and finish your shopping with that money. When you don't have excess cash, you can't shop impulsively. If you really want to avoid overspending and impulsive buying, don't bring your debit card as well. A credit card is a big no-no.
Don't buy things you can't return
When you shop during a sale, chances are they cannot be returned. So, when you shop impulsively to buy such things, although you feel instant happiness of saving money, you are likely to regret buying some items and want to return them. So, before making any purchase, check with the store assistant or read the return & refund terms if you are shopping online.
Create a fun fund
Every month when you create your shopping list, give yourself an allowance and add it to your fun fund. You can use money from this fund to give yourself some leeway. It can be ₹100/month or ₹1,000/month. But remember not to splurge.
Stick to no-spending days
Every month, set a few days as no-spending days. It is self-explanatory. It can be five days, ten days, or even fifteen days when you do not purchase anything. Make it a game that you play by yourself. Give yourself a fixed bonus amount to add to the fun fund as a reward. But make sure you resist yourself. When played fair, this exercise can serve as a big detox from impulse buying.
Take someone with you for shopping
Not sure if you can control your impulse? Then get yourself a shopping buddy whenever you have plans to hit the mall! This partner can be your spouse, sibling, or close friend, who will not hesitate to talk some sense into you when you feel like straying. They will keep you in check.
Think about the last impulse purchase you regretted
Impulse purchases often come hand in hand with regret. Before you add the item you are dying to buy, think about when was the last time you regretted your purchase. If it is soon enough, you have your answer.
Follow simple money management tips
Almost all of us struggle with money management. We often get confused about how to use money smartly.
Although with technological advancements, many wealth management apps are now available at our fingertips to automate these tasks, there are few evergreen tips we can still follow. These includes:
- Set aside some money as your savings and forget about it. Do not touch it unless it is an emergency.
- Estimate your expenses and stick to your budget no matter what.
- Create an emergency fund. Use it only if you lose your job or unforeseen medical emergencies.
- Appoint a trustworthy wealth adviser who can help you show suitable investment methods.
- Avoid taking a loan.
- Set your financial goals for the month or year.
Don't shop when you're emotional
Don't let your emotions stray you from having a healthy spending habit, as emotions play a significant role in impulsive buying. Don't go to a mall or market when you are upset about something. You may think you deserve this nice thing after the day you had. But don't give in. Remember, that's how you end up overspending.
Avoid shopping during month end
Month-end is the time when you struggle the most for money. And paradoxically, most sales happen during this time. If you have taken an oath to improve your spending habits, stick to it. Do not give in. However, if you really need to buy things, set aside the money for it. Do not splurge and stray from your shopping list at any cost.
Don’t pay with credit card
Did you know credit card users spend 83% more than those who pay with cash? It's true. It is simple psychology. Credit card companies pay for your shopping initially. So, while you are shopping, you don't feel guilty about spending your savings. This is how your credit card debt racks up. If you struggle to control online shopping, consider freezing your cards during those no-spending days.
Don't fall for influencer marketing on social media
Many advisors may tell you to refrain from using social media if you are undergoing impulsive buying detox. But that's not practical, isn't it? Today, brands are increasingly using innovative marketing tactics to increase their sales and improve their social presence. Influencers may lure you into buying, or brands may position lucrative ads on your feed. So, instead of quitting social media altogether, try ad blockers.
Treating yourself sometimes is good, but impulsive buying can harm your financial health when it becomes an addiction. Therefore, it is important to avoid or resist temptation. Hopefully, these 14 tips can help you to keep yourself in check and control your spending tendencies.
We wish you bountiful savings and lesser splurges!