Tag: spending

[NEEDS VERSUS WANTS]

 

To overcome impulse spending, the first thing to do is learn to separate your NEEDS from your WANTS.

Your budget will help you do this. Rent, electric, phone, paying your taxes, all of these are essential needs. Food, a modest amount on clothing and shoes which will help you hold down your job and keep money coming in, also NEEDS.

That designer handbag, great shoes, amazing jeans, well, sorry, those are NOT life’s essentials.

 

WE DESIRE WHAT WE SEE, AND SEE WHAT WE DESIRE

You are NOT entirely to blame. The whole of the ad industry is based on turning WANTS into perceived NEEDS.

Advertisers blitz us with their products at us 24/7. Perhaps you really DO need a new computer, for example. But don’t just say yes to the first as you see or the first salesman who comes along and tells you that you really NEED the model with the most expensive bells and whistles.

Or that you have to act now before the sale is over. Most of the time if there is a sale, it means it’s a slow month and they are trying to keep their numbers up!

 

SUCCESSFUL SHOPPING TIPS

The trick with shopping, even in a ‘sale’,  is to give yourself a cooling-off period before you buy anything that you haven’t planned for or budgeted for. Especially if you have a credit card.

When you go shopping, make a list and stick to it. In particular, never go shopping in a supermarket when you are hungry. At the holidays, make your list, check it twice, and do not go overboard at the holidays and then have to keep on paying for it via your credit cards months after the fact.

When you do go shopping, take only enough cash to pay for what you have planned to buy, or use a debit card linked to your checking account.

Leave your credit cards at home. In fact, try to get rid of all your credit cards by paying them down, and then keep the one with the lowest APR for emergencies.

 

EMERGENCY, OR IMPULSE?

And be very strict about what qualifies as an emergency. For Carrie in Sex in the City it was the Manolo Blahnik Mary Janes. For me, it would be my dog’s surgery in January.

If you see something you think you really need, give yourself two weeks to decide if it is really something you need or something you can easily do without.

By following this simple solution, you will curb your impulse spending. Then you will mend your financial fences and your relationships, and be able to move forward toward your short and long terms goals aligned with your budget, and not constantly busting it.

 

Is your weakness impulse spending?

 

Answer these questions truthfully:

1.)    Does your spouse or partner complain that you spend too much money?

2.)    Are you surprised each month when your credit card bill arrives and you see how much more you charged than you thought you had?

3.)    Do you have more shoes and clothes in your closet than you could ever possibly wear?

4.)    Do you own every new gadget before it has time to collect dust on a retailer’s shelf?

5.)    Do you buy things you didn’t know you wanted until you saw them on display in a store?

6.)    Do you often wonder what happened to the money you had in your purse or wallet?

 

If you answered YES to any two of the above questions, chances are you’re an impulse spender and indulge yourself in retail therapy.

 

THE DANGERS OF IMPULSE SPENDING

Impulse spending is not a good thing. It will prevent you from saving for the important long term goals you really want, like a house, a new car, a vacation, or retirement.

 

YOUR FINANCIAL GOALS

Once you define your adult financial goals, you will have to set a budget and stick to it.   Impulse spending is an enemy of any budget. It is pointless to sacrifice your long term goals for a bunch of short term ‘hits’.  Your retail therapy doesn’t cure anything, you just end up spending money on items that really don’t matter in the overall scheme of things.

 

THE RISKS OF IMPULSE SPENDING

Impulse spending will not only put a strain on your finances, but your relationships as well. Arguments over money is touted as the number one reason for divorce in this country.

 

Continued in: Avoid Impulse Spending Part II