Financial guru Jean Chatzky reveals how to keep impulse buying in check
As you head to the stores — or online — this Black Friday week, you’d do well to try to keep your impulses in check. Eighty percent of people did some kind of impulse buying last year, and of them, 66% regretted it soon after, according to a new study from the National Endowment for Financial Education and Harris Interactive.
This isn’t just about a t-shirt here and there or an impromptu lunch out. We’re buying furnishings for our homes, toys for our children, clothing and jewelry for ourselves — even sporting goods and tools. And yes, we buy gifts. All told, Americans spent an average of $463 on impulse buys — that’s about half the average person’s budget for the entire holiday season. And that’s the average. Some people did considerably more damage than that.
So how do you keep yourself — and your spending — in line?
- Shop with friends. But not just any friends — your frugal friends. If you hit the mall with buddies who love to spend, you’re more likely to want to spend too. After all, you don’t want to feel left out. Instead, when you need to go shopping, call up your most money-savvy friend, the one who knows how to stick to her budget and won’t over spend. She’ll help you stick to yours, especially if you share your goals.
- Monitor your mood. A new piece of research from the University of Minnesota’s Carlson School of Management found that women buy sexier clothing when they’re ovulating. Other people “sip and click” – they start shopping online after a glass of wine or two. Some people shop to make themselves feel better after a bad day. You need to know these things about yourself, and avoid stores when your mood or the time of the month is likely to make things dangerous for your wallet.
- Take a purchasing pause. Before you buy anything you don’t need, take some time to think it over. Sleep on it, take a few laps around the mall’s parking lot — whatever it takes to clear your mind. If you’re still thinking about it after, and you can afford it, you’re cleared to make the purchase.
- Know your weaknesses. If you like to shop, and you drive by the mall every day on your way home or walk by your favorite boutique on your lunch break, you’re going to crack. So you have to avoid the temptation. Take a different route home, pack your lunch and stay in. If you know that a sale will suck you in and force you to spend money you don’t have on things you don’t need, avoid them. When you’re spending money, you’re not saving money, no matter how big the discount is. A little more than half of NEFE’s survey respondents said that sales and discounts lead to impulse purchases.
- Wait on a windfall. 23% of the people in NEFE’s survey said that receiving a windfall – a tax return, gambling winnings, an inheritance, or a bonus at work – was likely to trigger an impulse purchase. It’s no surprise. But the best course of action with any sudden influx of money is to simply hold on to it for a little while. Don’t make major purchases, don’t invest it; instead, stick it into a savings or money market account for a few months and see how you feel on the other side. Often, these windfalls are rather emotional – especially those that come from an inheritance – and you don’t want to make any moves you’ll later regret.
- Leave your credit cards at home. It’s harder for us to spend cash than use credit cards – we feel what’s called the “pain of paying” when we actually have to hand over bills rather than swipe a piece of plastic. This is one of the reasons why a recent study in the Journal of Consumer Research found that people are more likely to buy junk food on impulse when they’re paying with plastic. The same goes for other purchases. If you don’t have your credit cards on you, you may not even enter the store. But if you do, the act of pulling money out of the ATM to make a purchase, or even counting out the bills on the counter, will cause you to think twice about whether you really need the item.