When your paycheck hits your bank, it can feel like everything is possible. You might be tempted to immediately go shopping or make a pricey purchase, but according to experts, it’s better to take a minute and think things through.
The temptation to splurge with a freshly filled account can be high, said Sherman Standberry, licensed CPA and managing partner at My CPA Coach, but that it’s important to exercise restraint and make smart purchasing decisions.
Here are some things you should avoid buying right after payday:
New Designer Items
Retail therapy may seem like a great idea when your wallet is full, said Standberry, but these impulse purchases can quickly add up and lead to financial strain later in the month. Instead of spending on these items, he recommends prioritizing paying off any outstanding debts, contributing to your savings and investing in your future.
While it can be tempting to spend your hard-earned money on the latest designer goods as soon as your paycheck hits, Ricardo Pina, finance expert and founder of The Modest Wallet, says it’s much better to wait until they go on sale or you have saved up enough.
“Designer items, especially new releases, come with a hefty price tag,” he observed, noting that, though these purchases can provide a momentary sense of satisfaction, they can also result in regret once the initial excitement fades and you’re left with a lighter wallet.
Instead of making impulsive purchases, he suggests setting a budget for discretionary spending that allows for occasional indulgences without jeopardizing your financial stability. “And if most of your clothes are still in good condition, there’s no need to constantly upgrade your wardrobe with expensive pieces.”
Similar to designer items, luxury vacations can quickly deplete your bank account if you immediately book one after receiving your paycheck. “While it’s important to treat yourself and take a break from work every now and then, it’s also crucial to plan and prioritize,” said Pina. Instead of impulsively booking an expensive trip, consider saving up for a few months or even a year to afford your dream vacation.
“You can also look for affordable alternatives or budget-friendly destinations that still provide a much-needed change of scenery,” he explained. “Remember, it’s not about how much you spend on a vacation, but the memories and experiences you create.”
Melanie Musson, finance expert with Clearsurance, is even more adamant about not purchasing a vacation in general. “Right after you get paid, don’t book a vacation,” she urged. “You should save for your holidays so that you can book the trip when the tickets are cheaper than usual, and you can find a good deal on a hotel. If your trip booking is based on payday, you’ll be at the mercy of luck to find a good deal.”
With new technology constantly being released, it can be tempting to upgrade your gadgets every time you get paid. However, experts say this can quickly become a financial burden and leave you with an abundance of outdated devices.
“Before making any big tech purchases, consider if you truly need the latest version or if your current one still serves its purpose,” Pina noted. “If it’s not necessary, try to hold off on buying new gadgets until you have saved enough or until there is a significant sale.” He said that this way, you can make more informed and cost-effective decisions when it comes to your tech purchases.
According to Evan Tunis, finance specialist and president of Florida Healthcare Insurance, impulse buying is a common habit that can be detrimental to your finances.
“Retailers often strategically place tempting items near the checkout counter or offer limited-time deals to entice customers into making impulsive purchases,” he said. To avoid falling into this trap, Tunis suggests making a list before going shopping and sticking to it. “If you see something that catches your eye, take some time to think about whether you really need it and if it aligns with your budget.”
With the rise of subscription-based services, it’s easy to sign up for multiple subscriptions without even realizing it. These recurring charges can quickly add up, said Tunis. Instead, take some time to review all of your current subscriptions and see if there are any that you can either cancel or downgrade to a lower plan. “This will not only save you money but also help you better manage your spending.”
Fast fashion, Tunis says, is a term used to describe clothing that is produced quickly and sold at low prices. “While it may be tempting to purchase trendy and inexpensive clothes right after you get paid, these items often have a negative impact on both the environment and labor practices,” he said.
Instead of constantly buying new clothes, Tunis recommends considering investing in high-quality, timeless pieces that will last longer and have a lower environmental impact.
Unnecessary Beauty Products
The beauty industry is constantly promoting new and trendy products that promise to transform your appearance. However, Tunis says these products often come with a hefty price tag and can quickly add up if you’re not careful.
“Instead of buying every new beauty product that hits the market, stick to the essentials and only purchase products that you truly need and will use regularly.” Additionally, he said to consider researching more affordable alternatives or making your own natural beauty products at home.
Eating Out or Expensive Groceries
Musson frowns against visiting your local supermarket after having money deposited. “Right after you get paid, don’t go to the grocery store,” she emphasized. “When you are starting fresh with a new paycheck, you may be tempted to skip your list and buy groceries on impulse,” she explained, noting that grocery stores are packed after payday because people are spending without planning.
Standberry said it’s easy to justify dining out at high-end restaurants or buying expensive grocery items when you’ve just been paid. However, these costs can add up quickly. “Stick to your regular food budget and save dining out for special occasions.”
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