Spending money is fun! It gives a quick endorphin rush that elevates your mood and improves your outlook on the world around you. Impulse shopping, whether in person or online, hooks everyone at some point, and once it begins, it’s hard to stop. For many, even the excitement of saving for a house, a vacation, or retirement isn’t strong enough to combat the impulse-shopping bug.
Part of the problem is the lack of a financial plan or budget. Many of us say we’ll go on a vacation once we have the money, but we never sit down to create a plan. There’s little incentive to save when the reward—a vacation—is arbitrarily “in the future.” Instead, pick a date and a location, then develop a financial plan to make that trip possible. For instance, knowing that setting aside $300 a month for six months will let you go on your dream vacation provides a strong incentive to stick to your plan. Use the same strategy for buying a house, planning your retirement, or any other major future purchase.
A budget is a helpful resource as well. Write down all the money coming in over the month in one column and list your expenses in another. The difference is what you have to live on for the month. Next, outline your personal expenses—food, entertainment, hobbies, etc. Subtract this from your remaining balance to determine your “fun money.” How much is it? Can some of that be allocated to pay down credit cards or your mortgage? Can another portion go into a retirement fund? What remains is your spending money for the month. For many, that number is close to zero. Instead of saving for retirement or paying down debt, we often spend that money, adding pressure to an already difficult situation.
Financial planners—professionals who help people manage their finances—are a wonderful resource for those struggling with spending control. They can outline your financial situation, help create a plan to pay down debt while saving for retirement, and still leave you some money for spending. For many, having someone other than a spouse or parent to answer to regarding impulse shopping helps reduce unnecessary spending while relieving pressure on close relationships.
Here are some additional tricks to help you gain control of bad spending habits:
- Pay all bills as soon as you are paid, ensuring the money goes where it should instead of sitting around to be spent on unnecessary items.
- Set up a system with your bank to automatically deposit money into a savings fund after each payday, so it’s out of your account before you have a chance to miss it.
- Choose a savings fund that requires 48 hours’ notice to withdraw money, such as a Money Market account. This delay gives you time to think through the proposed purchase and allows the excitement to wear off. Savings accounts are great for short-term savings, but the money can be too accessible for most compulsive shoppers.
- Track your money in a savings account or fund; there’s satisfaction in watching a savings account grow.
- If you’re saving for a trip, a house, or retirement, keep reminders of your “reward” handy—pictures of a sunny beach, your dream house, or new golf clubs.
- Before each purchase, ask yourself if you really need the item or if there’s something more desirable, like the trip at the end of the year or the new house.
- Leave credit cards at home when shopping. The hassle of driving back to get the card will stop you from making impulsive purchases.
- Keep credit cards away from your computer! For many, online shopping is even more enticing than in-person shopping—the anticipation of waiting for an item to arrive enhances the excitement. If you know this is a weakness, ask a trusted friend or family member to hold onto the cards for you.
Discuss your financial plan with family and friends and ask for their support. Involve your spouse in planning the family budget and encourage them to be part of this new system. The rewards are limitless; saving money can become just as addictive as compulsive shopping. Remember, the reward of a trip or a new house is always better than a new pair of shoes or that Louis Vuitton bag sitting in the store window.
