Friday 23 August 2013

Five Tips to Curb Impulse Spending

Chances are you aren't spending your paychecks on expensive sports cars or high powered speed boats. Instead your paycheck is trickling away on drinks after work, sale items at the store, and the occasional outfit. Small, daily impulse spending can quickly lead to an empty bank account. Curb your spending with these five simple exercises.

1. Track Everything

The best way to curb these impulse spending is to track each purchase. Whether it's using a check ledger, an online tool, or a scrap of paper, keep track of each purchase throughout the month. Write down the expense before you actually buy the item. On paper, it may not seem that necessary and prevent the purchase. 

2. Enact a 48 Hour Waiting Period

Impulse buys are rarely necessities. Often, they are niceties that happen to be readily available. Your coffee maker may work just fine but if you find a brand new Keurig on sale, you may find yourself considering the purchase.

Cut this behavior out entirely by making a 48 hour waiting period. Choose an amount you're comfortable with such as $5 or $10 and any purchase higher than that amount needs to go through a 48 hour waiting period before purchase. This ensures you spend money on necessities and prevents impulse spending.

3. Create a Budget

Having a budget and tracking your expenses is a basic behavior that helps you save money. Setting up a fool-proof budget with free online applications, like Mint, or purchased budget tools, like You Need A Budget, will allow you to track your expenses without lifting a finger. Prioritize sitting down every month and reviewing your budget. Just observing where money was spent will help you avoid impulse buys during the next month.

4. Set Up Reminders

Even people with the best intentions find themselves slipping into their past spending styles at some point. Having frequent reminders can serve as a powerful tool for preventing impulse spending. Sign up for financial news letters or financial blog rolls so these reminders show up in your mailbox and inbox unannounced and repetitively. If you're successfully avoiding impulse spending, the information will provide great tips for continuing to save. If you've relapsed into frivolous spending, they will motivate you to avoid future impulse spending.

5. Get a Buddy

Whether it's a spouse, a friend, a relative, or even a stranger on the Internet, get a budget buddy to help you prevent impulse buying. Having someone to talk to about your budget goals and implementation will provide accountability and a fresh set of eyes to review your spending and suggest places to reduce impulse buys. Looking at another person's spending habits can also motivate you to reassess wants and needs within your own budget.

Do you have have any questions or suggestions? Fill free to write in comment section.

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