How Impulse Spending will Derail your Retirement Plans
Regardless of how frugal a person may be, no one is totally immune to making impulse purchases from time to time. However, the more you give in to this, the more harm it will have on your finances – especially your retirement plans.
Impulse spending is one of the most common barriers to achieving financial independence, so it’s crucial that you develop a strategy to help you overcome the compulsion to spend in this manner. Below are some tips to help overcome impulse buying.
Calculate an Item’s Value in Time
Most impulse purchases are led by emotions, meaning that engaging the logical part of your brain will be the best way to stop it. An effective way to do this is to stop and think about the amount of time you would have to invest in order to earn what that specific item costs.
For instance, if you earn $20 an hour after taxes and the item you want costs $300, you’ll have to work for 15 hours in order to afford it. Now, is that impulse purchase really worth 15 hours of your time?
Don’t Purchase Items that Cannot be Returned
In many cases, the most tempting purchases are those that cannot be returned if you change your mind – such as that final clearance item you’ve seen online or in-store and think the bargain is too good to pass up. There are usually good reasons for items going on clearance – they may not perform as advertised or in the case of clothing items, the fit may not be quite right.
Most individuals have experienced the awful feeling of regretting a purchase that can’t be returned – at least buying an item that can be returned allows you to undo the damage to your finances once you realize you no longer want it.
Stop Shopping for Entertainment
If going to your local mall is your idea of entertainment, you’ll need to rethink how to spend your free time so that your financial situation can improve.
When you put yourself into an area of temptation such as a mall, there’s a strong chance that you’ll make impulse purchases, so stay away wherever possible. Also, refrain from hanging out with friends or family members who shop for fun.
Watch your Savings Grow
Once you stop giving in to impulse shopping, you’ll start seeing just how much money will be saved over time – funds that can be put towards your retirement or other investment accounts. Over time, this could amount to a few thousand dollars – which will have grown quite nicely by the time you reach retirement age.
Although it’s often tempting to spoil yourself with that little impulse purchase, this form of shopping becomes problematic when it starts affecting your finances. If you would like to find out more about how your savings can be put to work and grow as much as possible, get in touch with our financial advisors today.