Do you know how easy it is to blow $10,000 in 1 year on useless crap? Easy! Just do $27.40 of mindless impulse spending each day for a year.
Everyone falls victim to some type of impulse buying. For me, it’s usually at the brewery right before I pay the bill and leave. I see those fancy branded pint glasses with the brewery logo on it… Suddenly I convince myself that it’s important to “support the brewery” (as if paying $9 per beer wasn’t already enough!) so I add a few little mementos to my purchase.
Then when I get home I realize I’ve somehow been tricked! My cabinet is already full of ~80 other impulse purchase beer glasses that are just sitting there collecting dust.
Why do I keep doing this!!? How can I stop?
Some surveys show almost 90% of us make impulse purchases somewhere, somehow. And not just cheap stuff. Most people admit to buying things in the $100+ range for impulsive buying! Covid seems to have both helped and harmed our spending habits. While some people have become more frugal, others are increasing their online retail therapy. In the USA we are buying more video games, toys, home improvement stuff, and electronics.
What triggers impulse spending?
I always thought impulse spending was something you can control internally. But just when you think you’ve got your emotions under control, retailers come out with new marketing tricks, tactics, and methods that beat your internal programming. Those crafty buggers!
We have to be aware of both our own emotional spending habits as well as watch out for retailer trickery.
Personal triggers for impulse purchases
Our mood: Impulse spending mostly happens when we are extremely excited (~50%) or bored (~30%). Shopping while intoxicated doesn’t help! 🍻 And shopping while hungry doesn’t help either!
Our age: The younger you are, the more likely you are to make an unplanned purchase.
“Status awareness”: Those who notice what other people own or are doing tend to buy things quickly to feel included.
Instant gratification: This happens when you mix wants and needs with “right now!”
Subconscious habits: Grabbing a candy bar at the grocery store checkout is a common spending habit people do without realizing.
E-commerce vs. retail environment: Most impulse shopping used to happen in-person when the shopper was holding the physical product in their hands. However, our online buying is growing so the “thought of owning” is one of our spending triggers.
Retail trickery that encourages impulse buying
Store design or walking path: Physical shops are designed to make you walk near, past, through, under and over high demand items! They’re placed in areas easy to see and pick up. Things placed near the check-out lines are put there to trigger impulse buying. Online stores do this too, via a “virtual click path” while you are checking out!
Music, fragrance, and sexy signage: Stores will do anything to put you in a happy, relaxed and buying mood.
Time limits & urgency: When we read “promo ends in 12 hours” this triggers our fear of missing out on a deal. Also things like “Only 1 left in stock” makes us want it even more.
30-day money back guarantee: These offers make us think there’s no harm in buying, because we can easily return it if we decide later we don’t want it. Usually, we are too lazy to return things, even if we don’t need them.
“FREE shipping” or “Buy one get one FREE”: Everyone likes the word FREE, even if we have to pay for it!
Personalized and targeted ads: Almost all online advertisements are personalized via your location, internet search history, things you “like,” your demographics and more. It’s scary how much information is collected on you over time and used against you to encourage you to impulse buy. Don’t even get me started The Social Dilemma!
Tips on how to stop impulse spending (or at least reduce it!)
- Limit social media use! I’m not sure if you’ve heard of Facebook or Instagram… They are cool apps you can download on your phone that let you look at ads whenever you feel like it. 🤣 But seriously, social media is designed to excite you, then sell you stuff. Limiting usage limits your impulse buying.
- Log out of Amazon, or whatever online stores you regularly buy from. When you are forced to enter your Username and PW manually, it becomes less convenient to buy things and gives you time to second guess your purchases. The “1-click-buy” buttons encourage impulsive spending!
- Carry cash or a debit card instead of credit cards. I know, this seems so inconvenient! But, a bunch of research proves credit cards make you spend more, and makes unplanned spending less painful. Using cash or a debit card makes you think of the immediate impact on your savings account.
- Use apps and plugins to help limit spending! Icebox by Finder.com is a Chrome extension that changes the “Buy” button to a “Put it on Ice” button. This gives you time to re-think your purchase and stops impulse shopping. Another cool chrome extension is Amazon Contemplate that ads a 30-second wait time before you can go through with a purchase. In this wait time you can think about if you really need it!
- Get a credit card sticker or decal. When you pull out your cc to make a purchase, you’ll be reminded by Joe Exotic, Terry Crews, or other fun messages that impulsive shopping is bad, and saving instead is good! You can also just write reminder messages with a sharpie all over your cards.
Joe Exotic Credit Card Decal on Etsy! - Get an accountability partner. You can share your budget with a friend, make commitments, and hold each other accountable. People do less spending when they are being watched. :) (My wife and I share a Mint.com login – we see each other’s transactions and keep one another in check).
- For holiday shopping, go in with a list! Impulse purchases happen when you have no particular item in mind. Start a “gift ideas” list and keep it on your phone. Throughout the year when you see cool stuff that you want to buy others, jot it down in your list. When the holidays come around you will be more prepared for specific spending vs. unplanned spending.
- Calculate the cost of things in time or work-hours, instead of dollars. For example, if you earn $20 an hour and you see a $40 t-shirt you want to grab, that would cost you 2 hours at work to buy. Is it worth it? This method applies more logic to your decisions vs. emotional spending.
- Return stuff! Over half of people who do impulse shopping admit they feel regret or remorse when they get home. If you fall in this category, make yourself return the items. Many people feel embarrassed or are too lazy to go through the return process… Don’t be one of them! Return policies exist if you change your mind – take advantage of them.
- Start a good ol’ fashioned no-spending challenge. If these seem boring and hard to do – that’s because they are supposed to be! When I do a 60 day no alcohol challenge, my chances of buying excess crap at the brewery drop to zero. No spending challenges can be done with specific categories like clothes, fast food, or guilty pleasures, or try not spending anything at all!
How do you resist temptation and cut back on impulse buying?
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Heh… if my wife and I shared a Mint.com account, it would not go well for us. I’m glad it works for you!
On Wednesday I put a couple items in my cart at an online running store; just some gloves and a headband, reflective and warm (since it’s routinely in the 30s and 40s now when I run in the dark at 6:30am). I then ignored them for a couple of days. During that time I got not one but TWO charming witty emails from the vendor, the first offering a 5% discount and the second a 10% discount on the contents of my cart. IT’S DIABOLICAL.
Awesome! I actually had this written in my original list, but didn’t end up including it in the post… Add things to your cart, but never proceed to check out… You’ll magically receive discount codes and offers in your inbox over the next few days. It give you both time to think about your purchase, as well as a discount if you actually still want it days later! Not great with Amazon, but if you’re buying direct from a retailer it’s a great trick! (worked with me for Nike when I bought a new wetsuit). Cheers Adam!
Another great topic Joel!
According to Jay Walker-Smith, president of the marketing firm Yankelovich, we’ve gone from being exposed to about 500 ads a day back in the 1970s to as many as 5,000 a day today. For many of us, this generates a lot of temptation and creates desires in each of us that can never be filled.
Impulse buying is so dangerous and the harm with impulse buying is when it becomes habitual. The end result in most cases is that we’ve paid for an item that we really don’t need or want. Before making a purchase, sleep on it—especially a major purchase. Remember, impulse is the enemy of financial freedom.
“Impulse is the enemy of financial freedom!” Mic drop! Love it Jason. Have a great weekend mate!
Is it just me or has Instagram gotten VERY good at their ad algorithms? I wonder if it’s a matter of time before we start seeing more targeted ads for those of us that stream cable services.
I’m not married but I second the comment about a shared Mint account. I would probably paying for more things in cash… haha
Yeah Insta is amazing at sucking you in to ads. They are matched very well to the stuff we like to look at!
Impusle buying is very common among the people who usease credit card nowadays. Even I used to do this very often and end up losing my saving on these unecessary buying. Great to know these tips to avoid impulse buying. I would try one of the tick you have mentions like write down a fun massages. Thank you!
Cheers! Yes I’ve got fun scribbles all over my credit cards. :)
What has always really helped me was calculating the cost of things in time or work-hours, instead of dollars. For me what I used was the number of trees planted as I was a tree planter when I was in high school. This meant even a $2 pop turned into having to plant almost 17 trees at 12 cents per tree or a $15 movie was 125 trees. Even though I don’t tree plant anymore and haven’t for a long time I sometimes still put purchases into that perspective. So your $40 t-shirt was actually over 333 trees.
One other way that has helped me is to simply talk about what is happening. For example, when you see everything at the check out talk about how they are encouraging you to make impulse purchases. The simple recognition out loud of what they are trying to do can help you realize it and stop yourself.
Talking out loud is a great tip. Simple, but it works! Recognizing what’s happening is half the battle and definitely makes you double-check your initial impulse.
Love the trees example! You were paid 12 cents per tree? wow!
Haha, yes, 12 cents on average but it ranged from 10 cents to 15 cents as it was based on the terrain we were planting in.
Ever go back and visit the trees?
I do the same thing! It really helps cut down on the spending.
As an impulse spender in my early 20’s, my new wife suggested an idea involving a bit of delayed gratification.
Obviously, as a frivolous spender, if I wanted something, I bought it. I was then destined to be disappointed when I rarely used the purchased item and it quickly ended up in a corner of my home collecting dust.
The trick was simple: As we shopped around (mostly for things we actually needed), if I came across that cool new toy or gadget at a particular store, I was simply asked to wait an entire week before purchasing it. If I still wanted that item after a week, I was allowed to simply go back and buy it. Easy peasy.
At first this didn’t make any sense to me, because if I wanted it then, I sure as hell was going to want it one week later. But, much to my surprise, more times than not, I had talked myself out of the purchase or simply forgot about it. My impulse purchasing literally came to a halt, and nearly 20 years later, it’s still a general rule of thumb that I follow.
I recommend to anyone trying to avoid impulse buying to at least try it out. Simply wait 7 days. It also helps to have a significant other (or friend) to assist you in fighting the urge to cheat a bit, as well.
GREAT story Ryan. It’s simple tricks like this that truly work wonders! And it’s cool to hear that you still use this method today and it still works!
Very informative article on guiding people how to create budgets so that they can manage their finances with smart financial decision making by not wasting your money on impulse spending. However one should also know how to calculate their current income so they can plan these budgets which can be done by any online paystub services.
Budgeting is a massive part of it too, Matt! Cheers!
Great post and tips Joel!
I actually didn’t know for a fact that the younger you are the more likely you are to make impulse purchases – but it completely makes sense.
As it relates to status awareness – I completely hear you. The more you want to “look rich” rather than be rich – the status and brand of something can easily lead someone to impulsive purchases.
I look forward to reading more from you!
This is what I love most about the FIRE movement… “Looking rich” is short lived, as it’s only a single moment in time. “Being rich” is a lifestyle that you get to benefit from every day. It’s better to fill your life with things that YOU care about, vs. what other people care about. :) Thanks MMW – looking forward to reading more from you too!
Thanks for sharing your information. It’s hard to stop spending when you have money. When you broke you worry about money. But when we have cash we just blow it. Thanks again.
Yep I agree. I think that’s also why people increase their spending when their income increases. Make more = spend more. It’s a really tough habit to break and mindset to shift! Cheers, Mark!
Thanks for tips Joel! I have fallen prey to impulse spending for far to long. It is really good to read some practical ways to put the habit behind me. I downloaded that chrome extension and it is already getting the job done!
I have also been using an app that helps me put money away using automatic withdrawals and round-ups. I thought someone with your expertise would appreciate. Here is the link peakmoney.com.
Sweet! I’ll check it out! Congrats on cutting back. It’s tough to do this year when we’re stuck at home on the computers all day!
Haha, i hope it may reduce little. but impossible to stop. If i follow these tips i may reduce my spending. Lets see. Thank you!