Surge pricing (price increases due to demand) has changed everything in the buyer-seller dynamic. Every time I use an app like Uber and see a surge price for a trip, I am much more likely to confirm a purchase before the price goes up on future rides.
While the Fear of Missing Out (FOMO) has always been an underlying force in the market, new business models that play on these fears call for a new kind of thinking about impulse buying.
Buying is emotional because people are emotional. The most rational, data-driven purchase decision is wrapped up in emotional issues like fairness, sacrifice and hope. Buying on impulse can feel empowering in the moment and devastating later.
Unrestrained impulse buying can be a serious problem, closely related to a gambling addiction. Financial controls can assist, as can dedicated groups for overcoming these impulses. If you’re searching for a group to join, try something like Smart About Money or Daily Worth.
Most people only require some tips and reminders to help assess their purchasing intent before getting in the checkout line or clicking “Buy Now!”
This compilation of personal advice on combatting impulse buying comes directly from some of the sharpest minds in the financial sector.
8 Tips to Spending Wisely in a FOMO World
Online Window Shopping
“I used to impulse buy a lot in my 20s. I loved the thrill but hated the aftertaste. Like a lot of people, I am a huge online shopper (thanks, Amazon). To help keep the impulses at bay, I will often fill my cart and get almost through the checkout process, then close the tab and move on. Sometimes I will go back, but only after I have had a cooling-off period. Ninety-nine percent of the time, I never buy what’s in the cart. For me, I have the satisfaction of shopping, without the ultimate regret.” – Krista Cavalieri, principal at Evolve Capital.
“We can shift ourselves from mindless spending to mindful spending. Portion out your spending money as cash every pay period. Dietitians ask their clients to use measuring cups and portion out their food because people become disconnected from what a portion size really looks like. We can also become disconnected from our money and what we’re really spending when we’re solely using credit and debit cards.” – Christine Luken, author of “Money Is Emotional.”
Stick to Your List
“Most impulse temptations come from the larger stores – like Costco and Target – where there’s an item you weren’t planning on buying. You went for other planned purchases, but there’s a deal that’s ‘just too good’ to pass by. Even if it’s a good deal and on sale, no matter what the discount is, it’s still 100% more than what you were planning to spend anyway.” – Jeremy Walter, founder of Fident Financial.
Know a Need vs. a Want
“Things I’d enjoy having – but don’t actually need – can always be bought at a later date if some extra funds (i.e., a larger-than-expected income tax refund) become available. And the savings derived from curbing impulse purchases always allowed me to regularly fund my IRA.” – Timothy Wiedman, assoc. professor of Management & Human Resources, Doane University.
Delete the Apps
“Remove shopping apps. Having easy access to your favorite stores through mobile apps is certainly convenient, but too tempting for scrolling to lead to spending. Delete them from all devices and only go to the sites when you have a planned purchase.” – Jennifer McDermott, consumer advocate, Finder.com.
Create Your Own Value Comparisons
“Set up value comparisons. Rather than falling for their comparisons, create your own comparison using things that give you pleasure. Every time you’re tempted to purchase something unnecessary, compare it to the things you really value and enjoy. Example – $50 = family movie night; $5 = double scoop ice cream.” – Pamela Yellen, author of “The Bank on Yourself Revolution.”
Shop With a Clear Mindset
“If you’re having a bad day, you might want to stay away from shopping. People who are upset tend to be more impulsive and could potentially spend more money during a retail therapy/shopping experience. Retail therapy is only temporary, and once the feeling of buying something new wears off, you’ll be upset again.” – Natasha Rachel Smith, personal finance expert at TopCashBack.
Take a Picture
“Here’s what I did to break myself from this compulsion to shop. I used my smartphone. Every time I saw something I liked, I took a picture of it. And if it was something I absolutely had to have, I would purchase it a week later. I usually found that within that week there was something else that grabbed my attention or I realized I already owned some variation of it.” – Eartha Watts-Hicks, Earthatone Enterprises.
Keep this list somewhere you can see it throughout the day. Read, recite and print out the best advice for your spending type. It will be time well spent. What are some things that you do to avoid impulse purchases? Let us know in the comments below!
Source: Home Loans