Most Americans (64%) report that they waste a considerable amount of money, according to a new study by The Ascent. Some waste is minor – like ordering more than you can eat at a restaurant when taking home leftovers isn’t feasible.
In some cases, though, wasteful spending can be significant. Survey respondents reported their average wasteful spending each month to be $139, but also admitted to an average most-significant waste of $521.
That’s a lot of money being thrown down the drain, but one type of waste was cited by nearly 90% of those surveyed – making an impulse purchase they later regret.
The danger of impulse buying
An impulse buy is a purchase you make that wasn’t planned. It can be something minor – like snagging a churro because it smells so good – or it can be major purchases made without any thought. Buying an ill-advised snack won’t sink most budgets but picking up a new Xbox, pair of designer shoes, or something else pricey can create financial headaches.
“Marketers pay close attention to why consumers buy on impulse, hoping to encourage the habit – often quite successfully,” according to The Ascent. “However, mental health experts attribute some impulse purchases to anxiety and unhappiness and suggest that controlling those impulses will improve your emotional and mental health.”
How can you avoid impulse buying?
Ideally, you have a budget and set some of that aside for minor impulse buys (like an expensive coffee drink or eating lunch out). Those types of purchases happen and any budget should factor them in.
For bigger-ticket purchases, you need some discipline. Plan out what you absolutely have to buy now and set aside those things you need but can wait until the price is right.
If your stove breaks, you probably need to replace it right away at the best price you can find. But if your TV isn’t as big or nice as you want, then plan to replace it down the road by setting criteria that trigger the purchase.
You might simply wait until you have set aside enough cash for the purchase or perhaps you give yourself a green light if the sale price falls below a certain threshold. The important thing is having a plan and not acting until you meet the criteria you previously set for yourself.
Impulse purchases can lead to buying things you don’t need at all. To avoid them, it’s never a bad idea to have a cooling-off period where you agree to wait until you make the purchase if it’s over a certain dollar threshold. That level can vary based on your income and overall financial health, but having a cooling-off period can stop you from buying a new bike you’ll ride once or a piece of jewelry you’ll never wear.
To avoid impulse buys, you need to know yourself. If you’re prone to wasteful purchases – especially if you have very little room in your budget – then you have to take steps to control yourself.
This is an area where anyone can improve, but you have to do the work beforehand. If your credit card isn’t in your wallet when you go to the mall (maybe it’s hidden in the car) it’s harder to spend more than the cash you budgeted to spend. Take whatever steps you need to protect your budget and avoid a serious case of buyer’s remorse.