How do you define a want versus a need?
And once you draw the line between the two, how do you control the impulse to spend on something you don’t need now?
The easy part is talking yourself into removing money from your wallet:
“I deserve this.”
“I worked really hard this week.”
“Life is short, why not enjoy my money now?”
“If I don’t spoil myself, who will?”
The hard part is exercising control over spending, looking at that current money as funding for your future self, rather than immediate gratification that lasts less time than it takes to earn those funds in the first place.
It’s not enough to talk yourself out of impulse spending. You need tools that help and reasons to do it:
It’s OK to embrace the impulse:
The trick is to budget for it. Call it whatever you want – an impulse buy, a treat, gift or spree – just plan for it. Use a computer spreadsheet, paper and pencil or carry it on your smart phone app. Mint and Wally are two popular apps available for all devices that provide detailed breakdowns of spending and saving by amount and time comparisons, so you see where spending gets out of control.
Save for the impulse:
Along with budgeting, set aside a category (using a paper or digital envelope) just for impulse spending. Place a limit on that fund each month and once spent, there is and no more until next month.
Get interested in interest:
Impulse purchases add up. Want to see what that money means for the future? Use a compound interest calculator to set a savings goal. Choose an amount to save each month (perhaps the cost of a couple of fancy coffee drinks), the number of years you can save that amount, add the interest rate (from your local bank) and you can figure out what you will have. An example: $10.00 a month saved for 40 years at five percent interest yields nearly $5,000.00! That is money you won’t miss from your impulse spending.
Ignore the impulse; reckon with reality:
Student loans are big business: 44 million borrowers currently owe about $1.3 trillion, with each borrower in for an average of $37,000. Your impulse shopping seems trivial compared to what you owe, but redirecting those funds towards paying off those loans frees your money for other uses sooner.
Save where you can so you spend where you want:
This is the basic mantra of author, journalist, mother and financial survivor Donna Freedman’s Surviving and Thriving blog. She understands how to make it on the basics, work with what you have and live within your means, because she did it for many years. Her message: establish priorities in life and spend your money on those while you save on less important impulse spending.
Have multiple life plans:
Living is never done in a vacuum and never proceeds in a nice straight line. You have a job now that offers health insurance, but if you lose your job, can you pay for your own health insurance? You have auto insurance, but does your policy cover everything after an accident? If the opportunity to start your own business presents itself, can you afford to say yes? When you save instead of spend on your impulses, you have the money for life’s good and bad “Oh !%$*” moments.