Updated: Aug 23
Buying things on an impulse is the quickest way to rack up your expenses and that can amount to a huge number every year if not kept in check.
We have all made an impulse purchase. You may walk into a store with a list of planned items to purchase but you end up stumbling upon a sale which seems like great value for money. The forces of marketing are too powerful to overcome at times which is acceptable.
However, It becomes a problem when the impulse purchase becomes so frequent that it starts to drain your wallet faster than you think. Not tracking your expenses can make this problem worse.
Overspending is often cited as a key reason that stops people from achieving their financial goals. Here are some of the ways to avoid overspending and keep your impulse purchases in check -
Budgeting is the most important tool when it comes to getting a stronger grip over your finances. By creating and following a budget you can decide how you're going to spend your money according to the goals that you have created. Set aside a goal that could be related to achieving a monthly savings target, building an emergency fund or paying your debts and loans. Setting aside a fixed amount for a certain expense will help you avoid overspending.
2. Follow the 30-day rule.
If you have the urge or desire to buy something that you don't need, sleep on it instead of acting on it. The 30-day rule is the most effective when it comes to this. Studies have shown that with the passage of time you may not really have the same desire as you did initially or the product may not seem as attractive as it did. It also gives you time to research more, compare prices and make an informed decision.
3. Out of sight, out of mind.
Avoid visiting online shopping websites and uninstall any shopping apps on your smartphone. Online shopping is dangerous because you are able to see one item after the next very quickly. You have notifications popping through on your smartphone regarding sales and promotions and it then becomes quite tempting to buy it. But if these websites and apps are out of your sight, it is out of your mind too. Similarly, avoid visiting shopping malls when you are bored or emotional and when you do not have anything specific to purchase.
4. Create a list for your purchases and stick to it.
A list prepared beforehand helps you avoid buying unnecessary things at the store. Make a note of all the things that you need, if writing down is not something you enjoy, use an app on your smartphone such as Evernote. Practice the art of being strict with your list and if something is not on your list, do not buy it.
5. Avoid using credit cards.
With credit cards, we often tend to spend the money that we do not have. If you are unable to pay your credit card bills in full at the end of the month, you are spending more than you can afford. You then, get hit with interest rates and the debt just piles up. A great way to avoid overspending is by using cash instead. Take only the amount that you will need, if you're short on cash, you will not buy the things that you do not need.
6. Join a No Spending Challenge.
Once a week or so, have a no-spend day where you do not spend on anything other than what you have budgeted for and what you really need. Forming a habit of a 'No Spend Day' can have a positive impact on your attitude towards savings, after all, just spending once can break the cycle for the rest of the day.
7. Compare the costs to your hourly pay.
If buying a new phone costs you 1000 dollars, you need to compare the price of that phone to the amount you earn in one hour. If you make 25 dollars an hour, that phone will cost you 40 hours of your work pay which is equivalent to an entire workweek. Comparing it to your hourly pay gives you a different perspective of its real worth. Alternatively, you can look for another source of income such as picking up a part-time job or another side hustle.
The Ultimate Guide To Getting Your Finances Back On Track is a book that aims to help the user in being smarter about their finances. This guide contains seven sections - Financial Goals, Expenses, Savings, Income, Loans & Debts, Budgeting, and Investments. Each of these sections explains everything you need to know about Personal Finance in simple terms. By the end of this book, you will have learned the fundamental principles that will help you in maximizing your income, decreasing your expenses and increasing your savings that will overall kickstart your process of truly building wealth.
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