Impulse Spending is Really Hurting You, Here’s Why
With the fast-approaching Christmas holidays, it is no surprise that a lot of businesses are experiencing a sudden increase in sales. People are panicking, especially with how high the prices of, quite literally, everything, have been lately. Better buy now than later, right?
Last-minute Christmas shopping can result in a lot of impulse buying, even more than usual. But some people don’t need the push of the holidays to experience this phenomenon, in fact, the action of impulsive purchases with no previous plans are more common than a lot of us think.
More importantly, a lot of us do not realize the grave consequences impulse buying might have and how they can affect us. It is possible for people not to realize that they even have a problem with impulse spending, and if they do, they have no idea how to stop themselves.
This article will cover:
- Reasons behind impulse buying
- The harm they can cause
- What to do to stop it
What is Impulse Buying?
Sometimes we don’t plan to purchase something, but due to a strong and sudden desire, we sometimes do anyway. That’s impulse buying; it is when the decision to purchase something happens right before the purchase itself.
For example, if you head out to the shops with the clear intent to buy new socks, because you need them, that’s a normal purchase. However, if you suddenly see a hoodie near the cash register and buy it with the socks, that’s an impulse purchase.
In other words, an impulse purchase is not a premeditated purchase.
But don’t feel bad about it, because nearly everyone has impulse purchases, in fact, it’s difficult not to, considering the fact that we are surrounded by advertisements and marketing techniques designed to induce the need for purchasing in us. It happens to everyone, the other day I saw Hogwarts-inspired pajamas, and I just had to have them. I didn’t even think twice.
Why Do We Have The Urge To Impulse Buy?
Happy Feelings
Purchasing goods or services gives us a rush of serotonin. The phenomenon of impulse buying is based on our emotions, despite the fact that it is only a temporary mood booster. However, we all have bad or boring days, and sometimes a quick rush of our happy hormones is exactly what we need to make things more interesting. Purchasing goods only based on emotion is what makes an impulse purchase, impulsive, and any emotion can trigger this impulsiveness.
This is directly related to our personality traits, likes, and dislikes. For example, I really like pistachio ice cream. If I’m out and about, and see pistachio ice cream, the chances that I’ll buy it are very high. Especially since seeing the ice cream at a café will most likely result in excitement. We link the things we like to positive emotions, and there is a high probability that whenever we repeat certain behaviors — such as eating pistachio ice cream and being in a good mood afterwards, cause us to feel the need to do it again.
Personality actually has more influence than you may realize. An insecure person will form a deeper connection with an item that makes the feel better about themselves. Such as skincare products, which make us believe that we need them in order to have confidence, we need to use all of these different products.
The same logic applies to people who often experience stress; the serotonin from impulse buying counters unpleasant feelings.
The World Wants Us to Impulse Buy
Brands have tricks up their sleeves that promote the phenomenon of impulse buying. Especially since campaigns such as “Buy 2, Get 1 Free”, and other types of sales, are meant to induce “Fear of Missing Out” (FOMO). This is because sales and deals don’t last forever, which means that people will feel that if they don’t buy something, then they are missing out on a fantastic deal.
Similarly, purchasing is made very easy. You will always find some bits and bops near the cash register, which are meant to cause impulse purchasing. Or, the fact that online shopping is beginning to be a lot more popular than in-person shopping. In fact, the percentage of total retail sales that are online is expected to be 25% by 2025. People don’t even have to go out of their houses to buy something new anymore.
Everything is designed to make us buy more.
Impulse Spending Hurts Us… A Lot
Overspending Leads to Lack of Savings
It’s logical, when you overspend, you don’t have money leftover to put in your savings, retirement or emergency funds. This can be very dangerous, especially as overspending can result in a lifestyle in which people are forced to live paycheck to paycheck.
This means that in case of an emergency, an impulse spender may find it difficult to find sufficient funds, which can be life changing. These can range from not being able to pay your bills, to not having enough to fix a crashed car, or even not enough to pay for healthcare.
Moreover, not having retirement savings can result in a very limited lifestyle in the future, that doesn’t equal to the kind of lifestyle that one led when they were working. There is also a possibility that a person that overspends a lot may have to work a lot longer than they intend to.
But… Lack of Savings Then Snowballs Into Debt
Shopping can be seen as an addiction, and when we cannot satisfy the addiction, we look for ways to do so. This can, therefore, mean that people will go above and beyond to satisfy being able to overspend, especially spontaneously. Desperate people will take out loans to do so. However, most of us do not have such issues, and spend impulsively once in a while. But this can also lead to being forced to borrow money, in case of emergencies or other big steps in life, such as larger purchases like applying for a mortgage.
This is directly related to debt caused by the usage of credit cards, which can easily be done while over spending, since we have access to extra money that we do not actually possess. This debt influences our credit score badly, if the habit is not controlled. It is also very easy to forget about the fact that interest rates apply to purchases made with credit cards.
Bad credit and lack of finances or financial goals can restrict a person from moving forward with their lives.
And what at first glance seems like a harmless habit, it can actually cause a lot of real and very dangerous issues.
So What Can We Do?
Educate Yourself on Personal Finances
If you don’t have one, definitely consider opening a savings account, and following the 50-30-20 rule, with which 20% of the paycheck goes into saving each month. This rule helps those who have trouble with their finances, and is simple to use. Especially impulsive spenders, as they have an easier time understanding how much they can realistically spend on all types of expenses.
50% goes towards necessities, 30% towards discretionary expenses, 20% towards savings.
This then also allows impulsive spenders to make a budget. Being aware of how much one is allowed to spend, can really help with thinking twice about whether someone really wants to purchase an item, or perhaps they would prefer to spend their monthly budget on something else?
Or, perhaps they are looking at a more expensive item, such as a laptop, and they would like to save this month’s budget until next month?
Having a budget not only teaches people how to manage their money, but also allows them to spend money guilt free, if they have the funds of course. If one is in debt, there are many methods to try and get back to the starting point, in order to be able to utilize the 50/30/20 method well. A lot of people have found the Debt Snowball method incredibly useful.
Completely cutting out spending and buying things one would like, is just going to make anyone miserable.
Shopping With a Voice of Reason
Sometimes, shopping with another person can stop impulse buying, as it is natural for us to value other people’s opinions. An opinion of a trusted second party can influence and prevent emotional spending. Hence, they can be a walking voice of reason.
This directly counters the fact that we most often shop with emotion.
Give Yourself Time
One of the most popular advices is to sleep on it. People start to think a lot more rationally when they give themselves time to think.
If there’s an item at the mall that is really tempting, it’s best to take a breather, step back, and wait until the next day. The likelihood of that specific item disappearing, or no longer being on sale, is slim. Sure, inflation is messing prices up, but they are most likely not going to change from one day to the next.
Whereas, waiting a day can give a new perspective, and it may turn out that the item wasn’t needed or wanted in the first place, we were just inclined to get it because of emotions or smart marketing. Emotions, especially, can cloud our judgement.
The Bottom Line
Don’t feel bad about impulse spending; remember that this article covered the long-term issues and what happens when it gets out of hand. We all sometimes spend money on things that we don’t really need, but be aware of how much you are realistically allowed to spend because this habit can genuinely hurt your finances.
Shopping is fun, but know your boundaries.
