Planned vs. Impulse Spending

 

Saving money is a very simple concept that everyone understands. You look at what you take home with your income and make sure you don’t spend more than that. Although it may be simple, however, saving money does not come natural to us. Why do we find it so difficult? Well, in order to start successfully saving money, we need to understand that saving money is not so much a challenge of knowledge, but rather a challenge of discipline. We don’t spend more than we should because we lack common sense, but because saving money requires consistent effort that most of us either find intimidating, impossible, or too burdensome. It’s easy to choose to ignore our finances altogether and live in the bliss of financial ignorance, but we all know that eventually we have to face the music if we ever want to escape the paycheck-to-paycheck life-style. One way that we can all make a significant impact in our daily spending habits is to limit impulse spending as much as possible. 

Impulse spending is when you buy something you weren’t planning on buying, but you gave into the temptation to swipe your card so you can have the immediate gratification of whatever it is that caught your eye. There are multiple things we buy on a daily basis that we don’t think is considered careless with our money because it’s so commonplace in our culture today to swipe that credit card, but I assure you we can probably save an extra $100 a month, if not more, just by monitoring our spending habits. 

We can all really struggle with this because, again, saving money requires strong discipline. Something I often find particularly challenging is the pull for fast food. It’s so easy to go through a drive-thru at Whataburger or Chick-fil-A and have a tasty dinner on the way home that requires no cooking or cleaning, but it’s easy to forget that you probably spent at least $8 on a meal for one person, when $8 can easily be enough for a home-cooked meal that can feed at least two. And although $8 may not sound like that much to you, and maybe even worth it for that Spicy Deluxe at Chick-fil-A, let me assure you that the $8 adds up if you find it normal to eat out almost every day. If we spent $8 every day in the month of July, that equals out to $248 a month just to feed one meal a day to one person. That’s almost $3,000 a year for just one meal a day. For those just starting out after school, that’s probably close to 10% of your yearly income. Do you see how just a little can add up so quickly? 

Needless to say, planning out our expenses and limiting impulse spending can potentially save you thousands (and that’s not an overstatement). So I would like to share with you some practical tips that can help you limit your impulse spending and plan out your daily expenses. All are tips given by professionals that I will source, and I’m positive every tip will make the necessary changes in your spending habits that will gradually grow to become habits of huge saving! 

1.) Meal Prep 

This one requires the most discipline and hard-work, but is also one of the most effective ways to limit your spending and save lots of money over time. If you take time every weekend to plan out what you will eat for breakfast, lunch and dinner for the coming week, you will not only save money by buying groceries rather than eating out all of the time, but also you will find it easier to resist eating out once you build up the habit of already having pre-planned meals. I no longer find it as difficult to resist eating out if I already brought a lunch with me to work or if I have spaghetti and garlic bread waiting for me at home. (Also, you probably will get healthier too now that you’re not eating a greasy Whataburger every day).

2.) Ask Yourself The Question

I learned of this question by reading the book, The Elements of Investing by Charles D. Ellis and Burton G. Malkiel. The question is simply this: If you were the only person to ever know, would you spend the money? In other words, is this item something that you really want? Or are you just motivated by what others may think? I know this question may seem hard to apply to every situation, because of course I would love a new truck and find it both useful for my job as well as enjoyable when I receive compliments on my new ride. The point is that you must be certain that you’re not making a reckless money decision because of what others may think, but rather because you think it is a worthy investment that is within your means. Choose to buy as an investment for you and your family, not for others’ approval. 

3.) The Envelope System

I first heard of this strategy by Dave Ramsey. The idea is this: only spend cash, do not swipe that card. It’s easy to swipe your card and not visually see your money leave your wallet or purse. Eventually, you check your bank account and find that you’ve spent way more than you realized! Well the envelope system is a very tangible practice that will enable you to spend exactly what you plan on spending in the various daily expenses you make. First, think of all the regular, weekly expenses you have to make, and then label envelopes with each of those things. For example, you can have an envelope for gas, groceries, family/fun, date night, etc., place however much you are willing to spend for each of those categories into an envelope, and never spend more than what you predetermined. It’s a visual way for you to keep track of what it is you purchased throughout the week.

Of course, there are numerous ways we can limit our impulse spending, but these are just a few, practical ways that we can start saving money today and work towards our financial goals. It may require discipline, but everything worth striving towards does, so I hope these tips empower you to start saving your hard-earned money as soon as possible. 

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