Raise your hand if you have ever been tempted by spontaneous shopping sprees and those irresistible deals that have left your pockets feeling lighter than a feather.
Well, you are not alone!
In fact 40-80% of our purchases are impulsive! Whether it’s adding a new dress to the wardrobe or a cute item to decorate your already cluttered home, we are all guilty of falling for the spontaneous “must-have-it-now” moments that ultimately take a toll on our budget.
But the good news is, by understanding the psychology behind saving, you can overcome impulsive urges and develop healthy saving habits.
But first, let’s understand why we engage in impulsive spending?
1. Instant Gratification:
As humans, we are wired to seek immediate pleasure and gratification. Impulsive shopping provides a quick burst of happiness and excitement, as we acquire something new and pleasurable in the moment.
However, this instant gratification often comes at the expense of our long-term financial goals.
2. Emotional Triggers:
Emotions play a significant role in our spending habits. We may engage in impulsive shopping as a means to cope with stress, sadness, boredom, or even to reward ourselves after a tough day.
Understanding the emotional triggers behind impulsive spending can help us develop healthier coping mechanisms.
3. Social Influence:
Peer pressure and societal norms also contribute to impulsive shopping behaviors. We may feel compelled to keep up with our friends or societal expectations, leading us to make purchases that are unnecessary or don’t align with our financial goals.
Recognizing these external influences can empower us to make more mindful choices.
Now that you know the psychology behind impulsive spending, let’s discuss simple tips that can help you overcome impulsive shopping.
OVERCOMING IMPULSIVE SPENDING:
- Recognise Your Triggers:
The first step in overcoming impulsive spending is to identify your personal triggers. Reflect on situations or emotions that tend to lead you to make impulsive purchases. Awareness of these triggers will allow you to pause, reflect, and make more intentional decisions.
- Implement the 24-Hour Rule:
When the urge to make an impulsive purchase strikes, practice the 24-hour rule. Give yourself a day to think it over before making a final decision. Often, this time allows for rational thinking and helps you distinguish between genuine needs and impulsive wants.
- Find Alternatives to Emotional Spending:
Discover healthier alternatives to emotional spending. Engage in activities that provide a similar sense of joy or relief without emptying your wallet. This could include practicing self-care, pursuing hobbies, connecting with loved ones or engaging in physical exercise.
- Employ the “Price Per Use” Evaluation:
When considering a purchase, calculate the “price per use” of the item. Divide the cost by the estimated number of times you anticipate using or enjoying it. This approach helps you evaluate the true value and utility of the item, helping to deter impulsive purchases of items with limited use or short-lived appeal.
5. Utilize the Power of Visualization:
Before making a purchase, take a moment to visualize the long-term impact of that expense. Imagine the potential growth of your savings or the financial freedom you can achieve by redirecting that money towards more meaningful goals. This visualization exercise can help you make more informed decisions and resist impulsive spending temptations.
Thus, by curbing impulsive spending tendencies you can develop a disciplined approach to saving. On that note, here are some of the tips that can help you develop saving habits.
CULTIVATING SAVING HABITS:
- Set Clear Financial Goals:
Define your short-term and long-term financial goals. Whether it’s saving for a dream vacation, or starting an emergency fund – having specific goals provides motivation and direction for your saving habits.
- Automate Your Savings & Investments:
Take advantage of technology by automating your savings. For example,with Deciml you can automatically round up your everyday transactions and invest the difference in a Mutual Fund. This “set it and forget it” approach ensures consistent savings and investments without demanding too much from you.
- Track Your Expenses:
Maintain a record of your expenses to gain insight into your spending patterns. Tracking your expenses helps you identify areas where you can cut back and allocate more towards savings. Numerous mobile apps are available to simplify expense tracking and budget management.
- Celebrate Milestones and Progress:
Recognize and celebrate your saving and investing milestones along the way. These could include reaching a certain savings target or sticking to your budget for a set period. Rewarding yourself reinforces positive habits and keeps you motivated to continue on your financial journey.
Remember, overcoming impulsive spending requires a shift in mindset and consistent effort. (Don’t get us wrong, it’s okay to spoil yourself with a thing or two occasionally, provided you keep an eye on the bank account).
So, take charge, save smart, and be the CEO of your wallets!