Now that you have taken a look at what you are actually spending money on, keep it up! Of all the things you might do in the cause of personal financial management, this is the most important. You can’t know how you are doing unless you look. Here are some tips on how to minimize impulse buying.
With the facts of your financial behavior in plain view, you then have to keep asking the question: Do I really need to spend money on that? Answering this question may not be especially easy in many cases. Of course you need to pay for basic shelter, food and clothing, but beyond that, where do you draw the line? This blog and the next address this question.
Here are a few actions you might take to begin to get a handle on this question of what is worth your money:
1. Find the No Brainer Cut Backs
Certain purchases we all make have no excuse whatsoever to exist. These are the easiest to get rid of, once you focus on them. Annual fees from some old credit card you never use? Subscriptions to publications you never read? Fancy food that spoils in your refrigerator? A pile of unread books from Amazon? Your fifth pair of unused running shoes? It’s pretty simple: Did you buy it and never use it? In the future, before you buy something, ask yourself whether or not you will really use it.
2. Make Comparisons
So you bought a very expensive outfit this month on impulse. Look at the price tag. Now imagine something else that you want more that costs about the same amount—maybe a set of high quality Bluetooth speakers. Imagine yourself enjoying music instead of contemplating that outfit hanging in the closet mostly unused. Of course, maybe for you the example should be reversed. Imagine you bought those speakers instead. Consider how you hardly ever use them, when you could be wearing that great new outfit that you now can’t afford. The point is to compare what you did to what you maybe should have done instead. This comparison trick is great for tempering your impulse buying, if you do it before you click the “BUY” button.
3. Identify Your Weaknesses
This is the next step up in difficulty as far as deciding what is worth your money. This is stuff you really do want. How do you know it is a weakness? If you buy too many of the same kind of thing, that is a big hint. Another hint: some of your purchases are taking more of your income than you feel comfortable with. Yet another warning flag: some kinds of spending are making you feel kind of obsessive. Once you have identified your weaknesses, you need to make some decisions about what to actually buy and what not to. And guess what? You will never be able to do that just by serving up stern lectures to yourself. This is because blame and shame do not supply positive reasons for action (or inaction). They just make you feel bad. So where do you find those positive reasons? This comes from seeing a bigger picture and purpose for your life than whatever you happen to want at the moment. For now, it is enough for you to get a general idea of your weaknesses. In the next blog post, I will get into Big Picture questions.
4. Identify Truly Desirable Things You Just Can’t Afford
Do you have some of those? If so, this is evidence you are a human being. These too-expensive things often express your aspirations, and as long as you are proud of these aspirations, hold onto them. You already know they are worth your money. Maybe it is a better place to live, further education, something really nice for a significant other. The only problem is that you don’t have enough to pay for them (yet). Your aspirations will help you form a bigger picture of where your life is going. As such, they will not only give you goals to strive for, they will help you deal with your weaknesses.
One theme you may find popping up in your own spending patterns is impulse buying. Some research claims to show that, for people 18-24, almost half (49%) of purchases are the result of impulse buying. Even seniors, 65 and over, don’t do much better, coming in at 35% of purchases. Is this really true? I don’t know, but here is a question you can answer with more certainty: How many of your purchases are made on impulse? And by the way, there are many smart people out there who spend full time trying to appeal to your impulsiveness.
In the first three categories above, impulse buys can be found everywhere. Those extra, unneeded pair of shoes? Impulse. That outfit you bought when you would rather have gotten the Bluetooth speakers? Impulse. That stack of unread new books from Amazon? Impulse. Impulse. Impulse. There is a place for doing things spontaneously with money, although you can have too much of a good thing, especially if you are worried about paying the rent. In future blog posts, I will talk about impulse buying in greater depth, especially as it relates to credit cards. But for now, getting impulse spending under control can start as I have suggested here, by finding the no brainer cut backs in spending, making comparisons between what you actually bought versus what you wish you had bought instead, and by becoming more conscious of your weaknesses.
But these three steps are not enough. You also need to develop a wider vision of where you are going, what you really want, and what purposes you have in your life. Only with this wider vision will you be able to truly have a way to govern your personal financial management. So, up next, that is where we will go in depth: Deciding What Is Worth Your Money: A Bigger Picture.
If you’ve set aside enough money to start looking for your dream rental, start here.
Looking for more renter tips? Check out our other blog posts here.