4 Ways to Stop Your Impulse Spending

By Markets Fool.com


Maybe your siren is fruit juice. Photo credit:DowntowngalSource: WIkimedia Commons

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Let's say that you're in a store and on the verge of buying something nice but probably unnecessary -- like a $100 bottle of wine (or indulgence of your choice). Now, in the throes of the persuasion tactics of the specialty wine store purveyor and the heady atmosphere of sherry-soaked barrels and Chesterfield sofas, it might be easy to just say, "Who cares, I'm doing it!" and spend the money.

This is how a totally sustainable and healthy budget can be waylaid by impulse buying. After all, we all have our weaknesses, and willpower is a scarce resource.

How do you stop yourself in the moment? Here are four strategies to help you stop your impulse spending and take control of your finances.

Establish rules
Early research into impulse buying suggested that shoppers often feel out of control when making impulse purchases as part of their sudden need to buy somethingright now. Establishing rules may not work for everyone, but having a default decision or process to follow might help you bring some control back into your hands.

In the case of the bottle of wine, you could implement a rule about a cooling-off period: For example, "I always wait 24 hours before spending $100 or more on something." Alternatively, you could require accountability for purchases more than a certain amount: "I always call my spouse/friend/mom before spending $100 or more." Your rule might restrict wine purchases to $20 or less no matter what, or it might involve a monthly line-item budget for expensive wines.

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Whatever the actual rule is, the point is to interrupt the impulse to buy with a set of actions that you follow in that situation. The point is the make the behavior automatic so that you don't have to constantly fight temptation with willpower. No matter how strong you are, willpower will very often lose in the end.

Make it hurt with a matching contribution
Another useful strategy: For every impulse purchase or indulgence expenditure, send a matching contribution to your savings account.

We are oddly susceptible to discounts and expenditures that are framed as a good deal or a cost savings. Life is complicated, after all, and we often don't stop and think about how sensible that value pack of salami really is -- or whether 50% off a $300 pair of shoes is still a reasonable price for shoes.

Instead of trying to do the math on all of these fronts, try to simplify by raising the price of the indulgence. You might not be too flummoxed by a $100 bottle of wine, but $200 for that same bottle might give you pause. Is it really worth losing out on another $100 in spending money? If so, great -- enjoy the wine knowing that you've also "paid" for it with a savings contribution.

If not, forget it.

Of course, the key is to actually send the money to savings. If you can't force yourself to do this, the idea won't work so well.

Change your environment
If remembering rules or setting up accountability systems is a little complicated for you, you might want to consider altering your surroundings instead. We do a lot of buying relatively mindlessly; so to limit impulse purchases, it can be helpful to limit the opportunity to make them.

Retail environments in particular are primed to take advantage of our impulses -- the scents and music in a store, for example, can be strategically manipulated to encourage more shopping. Further, we are also highly susceptible to behavioral cues in our surroundings. Certain environments will trigger certain behaviors, like smoking or buying expensive wine. This is why a highly successful strategy for habit change is to change your environment -- with the old triggers no longer there, it's easier to establish new behaviors.

You can take advantage of this psychological factoid by adjusting where you spend your time and the places or ways that you shop. If you have a hard time saying no at the wine store, don't go to the wine store. A little sad, maybe, but incredibly useful. If online sales are your thing, unsubscribe from every online store's emails. (Note: If you're really into online shopping, sending these emails to spam won't work.) If you can't pass the Coca Cola display without buying at the grocery store, try going to a different store.

Just changing your surroundings can have a huge impact on the things you do, so consider your triggers and the environmental factors that might be affecting your decision making. A few tweaks here and there could save you a lot of money.

The article 4 Ways to Stop Your Impulse Spending originally appeared on Fool.com.

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