Spontaneous purchases are fine if you have the funds to spare. But if you find yourself going over your limits on your credit cards, stuck with overdraft charges on your bank accounts, or simply unable to save for your larger goals in life, it’s time to rein in your spending habits.
Here are some things you can do:
•Check your finances. Before you buy any major, unplanned item, give yourself permission to check your budget and account balances first. Convince yourself to walk out the store, go home, and look at your finances. If you didn’t have it on your mind before you went into the store, then it’s not an immediate need, and it can wait a day or two.
After your bills, your savings goals and your needs for the month, can you still afford the item right now? If the answer is yes, then you can buy it, worry free. If the answer is no, you’ve managed to hold yourself in check.
•Take some time to cool off. You need time to see if the item is a true need or an impulse that you’ll regret later.
Try adding the new item to a list of purchases you’ll make next month, after you’ve paid your bills and socked away savings. Even the act of adding the item ta list can be enough to alleviate pressure to buy it right away. If you still want the item later, and you can afford it after you’ve taken care of your necessary expenses, you can buy it with the certainty that your finances are still in good shape.
•Set aside a small amount every month for impulse shopping. Having a certain amount of freedom to spend on small things you enjoy can be more sustainable than simply trying to control all of your spending at once. And if you set a limit on your impulse shopping, that’s still a greater degree of control than you had before.
•Avoid temptation. If you know you’re tapped out for the month, and that you’re prone to impulse shop with your credit cards, try to stay away from the places that are likely to set off your spending habits. If you tend to shop on the Internet, you can download a website blocking application that can temporarily shut off access to websites you choose. Those controls can help you get to the end of the month with your budget intact.
•Keep your budget with you. If you can keep electronic notes on your cellphone, try keying in your budget for the month.
There’s an opportunity cost to every impulse purchase you make. Items on your budget will have to wait until the following month, savings might be deferred, or you could be giving up a low credit card balance. If you can see those opportunity costs in front of you as you shop, you can make better, more informed financial decisions.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 19 years experience in retail banking and with financial institutions in Guam and Hawaii. You can email him at firstname.lastname@example.org and read past columns at the Money Matters blog at http://www.guampdn.com