Impulse buying is silently destroying financial wellbeing of many American families.
Statistic from the USA TODAY/CNN/Gallup Poll states that spending too much and saving too little is the most common issue that causes strife among married couples.
How about these stats on impulse buying cited by the Mediascope, Inc.:
– Approximately 40% percent of consumer spending is impulse buying.
– Younger consumers with higher incomes have a greater percentage of impulse purchases.
– 90% of people make occasional impulsive purchases.
– Statistics state that 20% of what shoppers buy at the grocery store is bought on impulse.
According to a study conducted by Npower, men spend approximately $41 per impulse buy versus $31 for women.
Npower also found that the average person spends $114,293 in their lifetime on impulse buys. Most common impulse buys are food, clothing, magazines, wine, books, DVDs, shoes, trips, beer, and toiletries, home furnishings, music, clothes for the kids, jewelry, accessories, gadgets, garden accessories, flowers, toys, and day trips.
Living beyond our means has become the norm. Financing our lifestyles with easily available credit is almost expected, and anyone who is living on “cash only” basis is rare species about to go extinct. We buy more homes than we can afford, we drive cars that drain our monthly budgets and we eat our savings away.
If you suspect that you may be destroying your financial future by frequent impulse buying, here are few tips on what to watch out for as well as few practical suggestions on how to overcome your impulse buying habits.
1. You constantly wish for “just a little bit more.”
Do you find yourself constantly wishing for more? Is it hard for you to watch others upgrade to nicer cars, bigger homes, better furniture or even pricier, more prestigious private schools for children? If you’re quietly saying yes, then your discontentment may be driving you to impulse financial decision-making. Reflect on your spending habits and evaluate whether many of your purchases are done out of true need or out of a need to fill in an internal void or social pressures. Decide today that you will no longer live to impress others by spending money you don’t have on the things you don’t really need.
2. You use and abuse credit on regular basis.
Credit has become so accessible that any college student who does not have a steady income is bombarded with offers of easy money. Do you have a revolving balance on your credit cards? Are you using one credit card to pay off another one? Is your monthly credit card balance growing instead of declining? If the answer is yes, then you are most likely financing a “beyond your means” lifestyle.
Take the next few days, look over your credit card purchases and see exactly what you are buying. Is it expensive clothing? Maybe its time to move to a cheaper clothing line or to live out this famous great depression motto: Use it Up, Wear it Out, Make it Do, or Do Without. Have you fallen for the buy now and don’t make any payments until who knows when offers? Now that the payment time has come, are you struggling?
Whatever “it” is that you are using credit for, first make a decision to stop using plastic. Create a realistic debt repayment plan and do not pick up a credit card until you have paid your balances off and are ready to be a responsible consumer.
3. You aren’t saving at least 10% of your gross pay.
Saving is truly the foundation of healthy finances, yet so few of us actually save. Do you find yourself saying yes to instant gratification while ignoring the need for having financial reserves? If so, track your spending for the next 30 days and you’ll clearly see where your income is going.
You goal should be to set aside at least 10% of gross annual income. Portion of it may go into a retirement fund while the rest to a regular savings account.
While setting saving goals, focus on both short-term as well as your long-term goals. Short-term should include having an emergency fund, 6 months of living expenses, a vacation fund, a Christmas fund, etc. Your long-term goals should focus on retirement, car replacement fund, and college funds for your children, etc. Use an online budgeting software to help you create a budget and manage your spending as well as saving.
Harmful spending habits can be overcome. Remember, it isn’t an issue of not earning enough, but an issue of reconciling your spending habits with your income. Understanding your spending and correcting waste will lead you to financial freedom!