How to Stop Spending Money on Impulse Buys
We’re all guilty of spending money where we shouldn’t sometimes. When that cute blouse, new book or upcoming concert catches your eye, it’s hard to say no. After all, you work hard for your money, you should be able to indulge every once and a while. But what happens when those impulse buys start to become a bad habit? If your discretionary spending is hurting your checking account balance, check out these budgeting tips to save money without giving up buying the things you love.
- Get a clear picture of your historical spending: The key to cutting back is recognizing where you’re spending money. Use a tool like Quicken® to track the categories where you’re spending money like household expenses, groceries, clothing, dining out, bills and impulse buys. You may even be able to set up Quicken through your online banking so your purchases and payments are automatically tracked. You should also take a look at receipts – you may have spent $400 on groceries, but how many of those items were on the list when you walked into the store? Take a look at where you’ve been spending your money for the last three months and highlight the items you know were discretionary or impulse purchases. Make sure you look at both your checking account transactions and credit card receipts.
- Know why you spend: Once you know where your money is going, the next step in how to stop spending money impulsively is to figure out why you’re spending it. You don’t have to cut out every impulse or discretionary purchase at once, you just need to take a closer look at your finances and eliminate a few unnecessary purchases each month. Do you tend to spend more when you are stressed, had a bad day, or had a really good day? Once you know where you’re spending the money and why, create a budget that will allow you to save more and plan out your discretionary spending.
- Create a discretionary spending budget: Starting with your paycheck, subtract all your necessary expenses like insurance, loan payments, rent, utility bills and so on. Then, look at the “necessities” included on your monthly grocery and clothing lists and determine how much you need to spend to get by. Now, set aside some of what is left for charitable donations and grow your savings by contributing to standard, emergency or high-yield savings accounts.
Finally, create a budget for expenses like impulse buys, vacations, dinners out, clothing and music purchases, and use what’s left to spend on hobbies. One way to track your spending money and stay within your budget is to pay as many bills as you can right when you get your paycheck. Then, contribute to your savings and use what remains for discretionary spending.
- Find ways to enjoy what you love without breaking the bank: Just because you’re spending less doesn’t mean you have to have less fun! Look for ways to spend less for the same experience. Here are a couple of budgeting tips to get you started:
- Buying more when you’re hungry? Eat before you go grocery shopping, and make yourself a list of what you need. You can still include a treat or two, but adhering to the list will help you stick to your budget.
- Retail therapy breaking the budget? Consider other, less expensive outlets for your stress like exercising or cooking dinner with friends. When you need a pick-me-up, limit yourself to something under $10. (But keep these purchases few and far between.)
- Email blasts prompting you to shop sales? It can be hard to ignore those 50% off emails. But if you really need to curb your online spending, unsubscribe for a while to reduce the temptation to shop.
- Love those season tickets? Consider purchasing tickets for one or two games and hosting parties at your home or a friend’s home for other games instead.
- Are you a fashionista? Find a fellow friend who can’t stop shopping and swap wardrobes for a season. You’ll get a new look at next to no cost! When you do buy new clothes, limit yourself to three new tops and two new bottoms, matching them to clothes you already own to create more new outfits.
- Can’t stop buying best sellers? Borrow from friends or the library first. If you really love the book and would read it again, go back and buy it.
- Country Club membership a little too much this year? Consider joining a public course to get in your time on the links.
Save up for purchases instead of succumbing to the impulse buy
Even a great budget won’t cure the urge to shop. When you come across something you weren’t planning to buy and think you have to have, leave it on the shelf or put it on hold for now. Think about it for a few days and decide if it’s worth giving up other purchases. You may even find you don’t want it five days later. If you find it fits in your budget and you still want it after some time away, then go back and buy it. Planning for discretionary purchases will help you limit when and where you’re spending your money.
Sponsored content was created and provided by RBS Citizens Financial Group.