Don't Buy on Impulse

Throughout the year, I’m reviewing the top 20 lessons learned from Stan in my book “Your Mortgage Matters” (see last chapter for the list). This week we are on lesson #3.

Lesson #3: Avoid Impulse Buying – particularly with big ticket items

This might just be one of the biggest traps consumers fall into. Have you ever heard or said:

“With a sale like this, I can’t pass this bargain up.”

“My image would be enhanced by driving that shiny new SUV versus my 10 year old clunker.”

“That purse would look great with this outfit.”

“Sure, I’ll take fries with that”

“Oh, I don’t have to make payments for a year, definitely give me the upgrade.”

I know I’ve said things like this – well, maybe not the one about the purse. But it’s thoughts like these that cause us to buy things that we don’t need – and certainly don’t fit our budget. Often it is the first step down a path of no return. Nothing wrecks a budget like an unplanned and probably more importantly, an unneeded purchase - particularly if it is something that is more of a big ticket item. (We’ll call this anything over a couple hundred dollars). But don’t get me wrong, consistently making little purchases on impulse can add up.

Check out a few statistics about impulse buying:

• 40% of consumer spending is impulse buying (to put a number to that, it represents $4,207,920,000 per year in the U.S. – yeah, that’s $4 trillion)
• Up to 60% of super market purchases are made on impulse
• 88% of impulse purchases are made because the item is on sale
• 90% of people make occasional impulsive purchases and between 30-50% of all purchases were classified by the buyers themselves as impulse purchases
• Most people buy with their emotions and 75% feel happy after an impulse purchase
• Younger consumers with higher incomes have a greater percentage of impulse purchases

When I look at that dollar amount spent on things that the consumer had no intention of buying, it blows my mind. Here are five quick steps to help avoid impulse buying:

1. Shop with a list
2. Practice saying “no” to your children
3. Shop intentionally
4. Limit your shopping time
5. Pay with cash

Bottom line is that for us, and particularly our younger home buying clients, if we want to be able to save money and focus on the bigger picture of being able to make a difference with our finances, we must avoid buying on impulse.