“This is so cute! I need this!”
“Everyone is getting the latest iPhone 12 Pro! I must get it!”
“Wow, this is cheap. I think I need this at home, let’s just get it!”
I guess most of us are impulse buyers at heart, especially when we see items that we need or want.
It could be something as small as grabbing a chocolate bar when we line up to pay at the cashier or walking into Mac City “just to browse” and coming out with a new iPhone 12 Pro. Impulse buying is easy to overlook but it can also affect your overall financial health.
So, why do we impulse buy?
Well, firstly, a lot of it is based on emotional spending, either as a mood booster or a sweet treat for oneself. For instance, going for retail therapy to buy something to boost our mood when we are stressed out or feeling down. Secondly, something is on sale! Who does not love a good sale? We often tell ourselves that we are getting the best deal, and it is harmless, but is it true?
According to a recent report by the World Bank, millennials (those born between 1981 to 1996) form a majority of Malaysians who spend well beyond their means. Among the reasons include impulse buying, easy access to personal loans and credit card financing, the want for instant gratification, and seamless online purchasing. About 40% of millennials report spending more than they can afford, and 70% express dissatisfaction with their current income.
How then can we curb impulse purchases?
Here are four ways to help you stop spending on impulse.
1. Create a spending budget
If you have not created a spending budget, now is the right time for you! This will help you eliminate a lot of little impulse buys. How?
- List it down: Pen down your wanted items and monthly potential purchases.
- Budget and save: Come out with a budget for each item and save money for them.
- Wait: Wait it out a few more days before making the purchase as you might change your mind the next day. As time passes, that impulse may fade and allow you to make a more rational decision.
- Compare: Shop around and see if you can get a better deal, or perhaps even get it for free.
However, if going cold turkey in curbing your impulse buying habit is too much to take, you can also allocate a small “impulse buy'' amount in your budget.
Record all your impulse purchases down in a budgeting app and set up a notification that will let you know once you have hit your limit. This way, all your impulse spending will still be factored into the big picture of your budget whilst you obtain the freedom to still make spontaneous purchase decisions.
2. Leave your card at home, bring only a limited amount of cash to malls
What better way to stop spending than to limit yourself with the amount of cash you bring out shopping? Spending money the old-fashioned way with cash instead of mindlessly tapping your cards may allow you to feel the pinch of seeing your wallet or purse getting thinner and thinner. Besides, when you can actually see the amount of money you are spending, you might want to be a little wiser in your spending.
Of course, if you find this method too extreme (or if you consider physical cash too outdated), you can modify this strategy to suit cashless payment methods. This could mean only shopping with a debit card that is linked to a discretionary spending account, or using an e-wallet that has been topped up with a limited amount of digital cash.
With the limited amount of cash that you bring, you can’t overspend. However, if somehow you managed to save some money in the process, you might just find yourself unlocking another milestone in improving your financial health! And that, my friend, is the taste of achievement in curbing impulse purchases.
3. Make online shopping hard to access
Buying is now a click away. Online shopping is a double-edged sword. It can fulfil all your shopping needs instantly, but at the same time pose a threat to your financial goals. Retailers have now perfected the art of selling online. Some famous lines you cannot pass on when your phone notification rings:
- If you add another MYR15 to your shopping cart, you get free shipping!
- Spend a minimum of RM30 to get 50% off.
- You have five items waiting for you in your cart.
Hence, the best way is just to make online shopping hard to access. How?
- Unsubscribe from newsletters and catalogues, that way you won’t be tempted by their latest sale or their product new arrivals.
- Block the sites on your PC, so that advertisement would not randomly pop up on your screen and constantly remind you.
- Delete the apps on your phone in order to avoid getting looped into browsing items through the app or even receive notifications.
4. Learn to budget for your goals
Finally, keep the end in mind by having clear goals. Do you have any financial goals that you are trying to achieve? By having the end in mind, you will be more likely to rationalise every impulse purchase you want to make as it will affect your financial goals.
With your bigger goals in sight, what will be your response? Will you choose to react on your impulses, or will you choose to double your money by folding it in half and putting it in your back pocket?
Using the Maybank Financial Goal Simulator can help you keep these financial goals in sight and hold yourself accountable.
You can use it to budget for goals such as growing your wealth, saving for your retirement, and preparing an education fund for your own career advancement or your children in the future.
Once you realise how much an impulse buy will set you back from your target, the temptation can be overcome and you will be one step closer to achieving your goal!