Yahoo Finance Rachel Cruze Gets to the Root of Impulse Spending — and How To Stop for Good
It would be a wild exaggeration to classify it as an epidemic, but it is a serious problem in our society: impulse spending. According to Invesp, 84% of shoppers have made impulse purchases, and it accounts for almost 40% of all e-commerce spending.
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Why are we so prone to impulse buying? Financial guru Rachel Cruze recently got to the root of the matter — and provided insights on how to stop this ruinous habit — in a blog post on Ramsey Solutions.
Also see how impulse buying is affecting Gen Z.
Impulse Spending Is Partly a Cultural Problem
Before we dive into Cruze’s analysis and proposed solutions for impulse spending, let’s think about the word “impulse.” It means, according to Merriam-Webster, “a sudden spontaneous inclination or incitement to some usually unpremeditated action” and “a propensity or natural tendency usually other than rational.”
The mere idea of being anything “other than rational” with money is scary. And yet, many of us are prone to impulsive behavior, no matter how disciplined we may be, and it’s not just a matter of neuroscience (our brain’s frontal lobe controls executive functions, including impulse), it’s also a matter of culture. We live in a consumption-driven society. The things we buy carry meaning beyond their purpose. For example, a designer handbag or a Rolex watch can signal that we’ve reached an elevated status, inviting respect from others.
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Impulse Spending Helps Us Feel Better – for a Short Period of Time
Then there’s the emotional factor, which Cruze touched upon in the blog. You’ve probably heard of “retail therapy” – the act of purchasing something to feel better. Impulse spending often is a result of the thinking that things can solve our suffering, even if only for a brief period of time.
“When you’re having a rough day, does a little retail therapy sound like the cure?” Cruze wrote. “Maybe it’s not a huge purchase. This time.”
However small or innocent impulse buys tied to retail therapy may feel, they’re inherently dangerous, as Cruze highlighted.
“Making decisions based on pure emotion is a surefire way to let impulse buying take control,” she wrote.
Unfortunately, retailers know and exploit our weaknesses here.
“They’ll play on your emotions with their ads, hoping it’ll hit a nerve that causes you to buy,” Cruze wrote.
The Taboos Around Money That We Grew Up With Haunt Us
Another reason we impulse buy: We may never have been taught that it’s risky in the first place. Most of us (particularly older generations) grew up in a social environment where talking about money was taboo. And the stigma around talking about finances persists, even in intimate relationships. According to a 2021 study by Fidelity Investments, one in 10 couples didn’t know their partner’s salary.
Additionally, we may have had poor financial role models. We can’t just snap out of what we were raised to believe or understand.
“The way money was handled in the household you grew up in shapes your money mindset,” Cruze wrote. “But don’t just blame your past.”
We can’t change how we were raised, but we can change how we think about money going forward. It starts with reflection.
“Do some digging on how it affects your spending today and make changes,” Cruze wrote.
Retailers Trick Us Into Thinking We’re Getting a Bargain
We also may impulse spend because we’re lured into thinking we’re getting an awesome deal – even if it’s on something we don’t need, or, at times, even want.
“I totally get this one because I love a good sale,” Cruze wrote. “But, you guys, this is a total marketing tactic. When you think you’re getting a deal or ‘free shipping,’ you’re way more likely to pull the trigger on the purchase–and that’s exactly what the marketers want you to do.”
Breaking the Habit of Impulse Spending for Good
Impulse spending is a financial pitfall, and all of us, no matter our income level or net worth, need to steer clear of it. How do we do that? Cruze provided 10 useful tips everyone should – and can – adhere to.
Budget. Budgeting isn’t just a way to track your spending, it’s a way to stay in your lane, financially. Make a list of needs versus wants and always refer to this list when temptation strikes.
Allow yourself some spending fun. Unless you’re in financial dire straits, you don’t need to cut out all spending joys altogether. Have a little bit of leeway, within reason. Weave this allowance into your budget.
Wait it out. The enemy of impulse is patience and thought. To fight impulse spending, give yourself a day or two to reflect on whether you really need something before buying it – even if it’s on sale for a limited time.
Plan it out and rely on cash. Credit cards can be weapons of financial destruction. Cruze recommended using cash when possible, so that you’re less likely to stumble into high-interest debt. She also recommended meticulous planning, including meal planning.
Shop when calm. Remember, impulse spending can be tied to retail therapy. Don’t shop when you’re feeling particularly emotional.
Ditch comparison thinking. They say comparison is the enemy of joy. It can also be the enemy of wealth. Don’t let thinking about what other people control your thinking about what you need.
Drop social media. You don’t need to completely cut off social media, but do take a break. “Try deleting Instagram and Facebook for a week (or more) and see if you notice a difference,” Cruze said.
Embark on a no-spend challenge. Sometimes a little bit of competition is exactly what we need – even if we’re just competing with ourselves. Cruze suggested trying a no-spend challenge. “Try this for a month,” she wrote. “It’s a great reset for anybody!”
Leave the credit cards at home. Again, stick to cash when possible.
Keep your goals front and center. Your goal, surely, is not to be broke and in debt. More likely it’s to have financial freedom and security. “Help yourself out by remembering the important goals you’re working toward,” Cruze wrote. And remember: The bliss of an impulse buy simply never lasts.
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This article originally appeared on GOBankingRates.com: Rachel Cruze Gets to the Root of Impulse Spending — and How To Stop for Good
