Have you ever thought about impulse buying and wished that one day you could have full control over your spending habits? Let’s say you promised to manage your money wisely so you can stretch the budget until payday. But when a friend invited you to the mall, you found yourself swiping the credit card to purchase a new pair of Nike shoes. Or maybe you while buying groceries on the weekend you ended up grabbing items that were not on the list. These scenarios are clear examples of impulse buying.
Impulse buying is simply an unplanned decision to purchase which undermines your budget. In today’s world, people embrace the culture of consumption, which makes them more likely to succumb to purchasing material things.
It’s hard to curb impulse buying behavior, especially if you are aware that you will receive a salary at the end of each month. There is a proverb in Tagalog that goes: “Aanhin pa ang damo kung patay na ang kabayo.” Roughly translated: “If the horse is dead, the grass will still grow.” This kind of thinking triggers you to live like a one-day-millionaire.
While it’s true that an your wealth is worthless when you’re dead, impulse spending can impact your lifestyle and goals. Here are six things everyone needs to know about impulse buying:
- Social Pressure
There are some people who cannot resist the temptation of buying products which their friends have bought. The need to be accepted and desire to belong are reasons for impulse buying. For example, if all of your friends have the latest iPhone and yours is an old one, you may feel like you’re out of place.
- Sense of Competition
Sense of competition is needing to have what everyone else has. Competition is spending money on stuff you don’t need to impress other people. This habit will put you into debt if not controlled. For instance, social media is one major factor that contributes to a sense of competition and envy. When your friends post pictures of their travel to Singapore, you feel you want to book a ticket to Hong Kong so you also can have pictures to show on social media.
- Showing Off
This mentality occurs when a person decides to buy a new item in the mall to show his friends that he has the “latest.” Men usually talk about their new cars or gadgets, while women tend to show off something to do with fashion, such as clothes. Impulse buyers are more social, status-conscious, and image-concerned. However, showing off is simply the enemy of simplicity and frugality.
- Enticing or Appealing Advertisement
Sales and easy credit with zero percent interest are very tempting to consumers. It’s hard to say no to cash loans and credit cards because they are easy. Furthermore, advertising industries use a strategy called “association” which means creating positive emotions connected to the product. For instance, sporting equipment companies use successful athletes like Lebron James or other TV personalities in their ads to create a strong psychological connection with customer. When a customer sees his idol endorsing certain products, he can hardly resist the temptation.
- Credit Card Spending and Delayed Gratification
Although the idea of the credit card is “use now, pay later,” it will incur penalties once you fail to pay on time. Since penalties are issued for late payments, this could be a problem when the little charges accumulate over time. Needless to say, it’s more appealing to enjoy purchases than to put your money in any investments which have potential to grow over time.
- Depression
Some people tend to go shopping as an emotional relief or when they are severely depressed. For instance, when you’re feeling blue and socially isolated. Shopping is like an instant therapeutic solution that gives pleasure. Curb spending when you are depressed and find healthy ways to address the issue. While you’ve been happy making purchases in the moment, remember to think of your financial goals.
The central issue of spending habits is to find the right balance between satisfying your needs and wants when making purchases while at the same time saving and investing wisely. Ultimately, you’re the one who is in charge of making sound financial decisions.
Author
Jun Amparo
Amparo is a University Counselor and lecturer at Asia-Pacific International University in Thailand. He is a speaker and has written two books about marriage and personal finance. To read more of his work, please visit his blog, www.richlyblessedtoday.com