How Your Impulse Spending Is Hurting Your Finances
Written by
Heather Taylor
Edited by
Molly Sullivan
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Despite the looming fears of recession and soaring inflation, Americans are still finding ways to make impulse purchases. According to CNBC, shoppers now spend $314 a month on “revenge shopping.” This number is up significantly from 2021 when shoppers spent a reported $276 on impulse purchases each month and 2020 when the amount spent was $183 each month.
While the COVID-19 pandemic has changed many attitudes toward spending and money, indulging in impulse shopping for a prolonged period is a slippery slope when it comes to your financial health. Here’s what consumers need to know about how impulse purchases hurt their finances and how to break the habit.
How Impulse Spending Hurts You
There are several ways prolonged spending on impulse purchases can hurt consumers.
Impulse Purchases Add Up
Spending a little bit here and there adds up. Today, it’s $80 at a beauty store. Tomorrow, it’s $15 at a coffee shop. In a few hours, it may be $40 at happy hour. This is $135 and the week isn’t over yet.
Once you allow little purchases to become a habit, the amounts rise, said Emma Protsik, CCUFC and supervisor of financial coaching at Ent Credit Union. This may put you into a difficult financial position and slow down progress toward existing financial goals you have, like putting the money toward retirement savings.
You Could Slide Into Debt
The more someone continues to spend money on impulse purchases, they may be tempted to use credit cards or other credit to fund these purchases. This could lead to a situation where you need to start putting your bills and other needs on credit because you spent all your cash, said Protsik. Before you know it, you may enter into unnecessary, high-interest debt.
Impulse Buys = Quick Fixes
We are not forced to make impulse purchases despite being bombarded by targeted advertisements every day. What often happens is an impulse buy may be the result of our emotional state and personal psychology.
“Some people will buy more when they are having a great day to keep their mood up while others may gravitate towards shopping to make a bad day better,” Protsik said.
Shopping, Protsik said, releases dopamine in your brain, which is why it can become a coping mechanism for some. In time, we may seek out more temporary quick fixes or happiness in our days. On a good day, we may buy a bottle of wine to celebrate a win at work. On a bad day, we may buy a bottle of wine as a means of escape from various challenges or issues.
Regardless of what you choose to impulse buy, it is crucial to be aware of how you interact with spending money.
Tips for Curbing Impulse Purchases
If you feel ready to spend with intention rather than on impulse, here’s what you need to do.
Take a Moment To Think
Consumers can avoid impulse purchasing if they realize when it is happening and give themselves time to think through the transaction.
If you’re shopping online or in person, Protsik recommends waiting a day before you check out. Use this time to think if the purchase is a want or a need. Ask yourself if buying it aligns with your personal money values and goals.
Take the Impulse Away
Open your email inbox. Start hitting unsubscribe from shopping emails. Do you have push notifications turned on for stores? Turn them off. Do you often find yourself impulse-buying items you see on Instagram or TikTok? Consider taking a break from scrolling through these apps or even deleting the apps for a few days to see what happens.
Some consumers may feel empowered enough to implement other challenges where they take the impulse away from shopping, such as engaging in a no-spend month. This can help consumers save money and curb overall impulse spending habits.
Create a ‘Fun Fund’ in Your Budget
You don’t have to deprive yourself totally of all treats! A restrictive budget, Protsik said, is not sustainable if it cuts out wants completely.
“Create a section of your monthly budget made for fun purchases to give yourself a limit to purchase things you enjoy while still saving a portion of your income for your goals,” Protsik recommends.
Those who have difficulty tracking purchases electronically may take out cash to avoid overspending. First, prioritize savings, goals and needs to make sure you have these covered in your life. The rest is yours to spend.
More From GOBankingRates
