Impulse spending is about making purchases spontaneously without planning or budgeting. It is about “wants” over “needs.”
Spending money unplanned here and there might spark joy, but it can also stress or worry you. It can lower savings, increase your debt, and overall inhibit your financial wellbeing.
Realistically, impulse spending is a normal part of life, but bottom line, it’s important to keep it in check to prevent it from affecting your financial goals.
We met with Marvin Cantillan, Personal Banking Advisor with Cambrian, and chatted about what to be aware of when it comes to impulse spending and how to keep it to a minimum.
Here are a few techniques you can try to control your urge to impulse shop:
Leave room in your budget for unplanned purchases. “It is best to budget intentionally for impulse spending, and how much to put aside for it will vary from person to person,” says Marvin.
Create a budget that works for your unique life situation. Make sure your responsibilities are covered and you have a plan for saving. Any extra funds could be for spontaneous purchases.
Visualize your required costs by listing them. Needs will include things like rent or mortgage payments, groceries, utilities, transportation, insurance, and so on. This will give you a clear idea of your total monthly required costs.
Then, write a list of things you know you don’t necessarily need: new clothes, shoes, games, eating out, etc. This will help you create your budget.
“It could be helpful, as it shows the difference between what is important to priorities in life, and what is not really needed,” says Marvin.
You are most susceptible to impulse spending when money feels more available—for example, on payday. Try setting up automatic transfers to savings accounts in advance so that a chunk of your paycheque goes out of sight, out of mind, and safely stowed away.
Also note that when a payment method is convenient, you’re more likely to spend. Watch out for apps on your phone with credit card info saved—they make it very easy for money to slip away. It gets very tempting to get that instant gratification with the click of a button or a scan of your face!
Try taking a break from apps like Amazon and DoorDash, or at least try deleting your card information. If you make it a little more difficult for yourself, you’re less likely to take that step to spend.
“If you take out the card info from an app, needing to walk 10 steps across the room to get your card might prevent that purchase,” says Marvin.
Another factor that can contribute to excessive spending is societal pressures, like what your friends are buying or what ads you’re seeing.
“If you see a lot of ads on Instagram saying, buy this new golf club, buy this new car, or buy new shoes or clothes—keep in mind that you might not need those,” says Marvin. “Maybe those purchases are good for the celebrities or people you know, but not so good for you.”
Try unsubscribing from marketing emails and being aware of how ads or your peers could cloud your judgment.
No-spend challenges, like halting all recreational spending for a month, can lead you to reflect on what is important and what transactions aren’t needed.
“You may not have realized that small purchases, like $10 or $15, add up if you keep making them every single day,” says Marvin.
A pause in impulse spending like this will boost your savings and make you aware of where a chunk of your money may have been going. Try doing it with a friend to keep accountable!
There’s a reason “sleep on it” is a common expression! This strategy minimizes emotional purchases and gives you more time to consider whether you truly want a product, or if it was a fleeting feeling.
“You might ‘need’ it now, but maybe later you're going to think, did I really need it at that point?” says Marvin.
Waiting can also give you time to ensure money you want to spend on something will fit comfortably into your budget.
You don’t have to figure it all out on your own. Book a meeting with us to start a conversation about plotting out your budget!
We would be happy to discuss your unique situation with you.
Our goal is to make complex topics like this one, simple.
