3 Ways to Manage Impulsive Spending
When I was younger, my dad used to always roast me for wanting to spend money as soon as I got it. Fifty dollars on my birthday? I wanted to go pick up some clothes at Green Acres Mall. Five dollars from mom? I wanted to go to the 99-cent store and get some rainbow brownies. Found 25 cents on the floor? I wanted to find a candy machine and get some gum. My dad would say, “Boy, you spend money like it’s burning a hole in your pocket.”
Impulsive spending or as my dad called it, “Money Burns a Hole in my Pocket” syndrome is a devastating condition. It slowly and subtly creates financial ruin for its victims by making saving nearly impossible. No savings means no game plan for health emergencies or upcoming bills, and without that you might as well dig your own financial grave.
If you suffer from this condition, I have good news for you! Although it can be fatal if left untreated, impulsive spending is curable. By putting the proper mechanisms in place, you can extinguish the “fire in you pocket” and enjoy financial freedom. Here are 3 tips to help you on your way.
Automation
The bottom line is this: You can’t spend what you can’t see. Automation pays off your bills or places your money in a given account without you ever having to move a muscle. You can call your bank or service provider to set a specific time frame for when you want your money to come out.
Let’s say you get your paycheck every 2 weeks on a Thursday. You can set up auto pay to take money out of your bank account bi-weekly so that you never have to worry about missing a payment. The money that would otherwise be susceptible to spending through impulsive purchases would now be safe and sound.
I have a monthly auto pay system set up to charge $40 to my credit card for Visible, my phone service provider, and $26 to my debit card for Affirm, the loan service I use to pay off my phone. Also, I decided to establish a $5 weekly recurring investment to my Acorns account. Automation has made my life much easier when it comes to paying off bills and actively investing.
Limit Cash on Hand
Okay, this is more of a mental thing, but I find that having less cash in my wallet deters me from making a bunch of unnecessary purchases. For some reason, seeing my bank account balance decrease hurts much more than seeing cash come out of my wallet. I capitalize on this psychological phenomenon by limiting my cash on hand to $40 or less — and $40 is a hard maximum. I would never suggest getting rid of cash altogether as it is important to have in cases of emergency, but it is helpful to set a low wallet amount that you vow to never eclipse.
The Contingency Plan
If all else fails, make sure that the money you do spend is giving back to you in some way. If you know that there is one store, movie theater, or restaurant you always visit, check to see if there is a rewards program available for that place. I have a confession to make: I am a complete Dunkin’ Donuts addict. I love the donuts and the 2-for-$5 breakfast sandwiches that they serve.
After spending upwards of $7-$8 per day on these items, I came to the conclusion that I had to do something; either quit cold turkey or receive some type of return on investment for my purchases. Recently, I acquired a DD Perks rewards card. By signing up alone, I received a free beverage and I’m already on track to get another one soon. Yes, it’s not ideal. I’m still spending money, but at least I am getting something extra for it. Many of your favorite places such as CVS, Starbucks, Regal, and Subway have rewards programs. Don’t miss out!
