Take a moment to look around your house. Did you spot anything that you haven’t used in a while or are even still sitting comfortably embraced by its packaging?
Perhaps the clothes in your wardrobe that you’ve never worn, the kitchen utensils that you’ve never needed, or the exercise equipment wearing a coat of dust in your basement.
While they may seem innocent to your financial health, here’s what slickdeals.net has to say about impulse purchases among Americans in 2018.
“respondents spend an average of $450 every month and that adds up to $5,400 annually or $324,000 over the course of their lifetime.”—slickdeals.net
With a majority of the impulse spendings happening in-stores, there seem to be lesser impulse purchases made online amounting to $155.03 per month as of January 2020.
Perhaps the COVID-19 would bring the tide down with the temporary closing of brick-and-mortar stores and stay-at-home orders.
But, another survey from slickdeals.net sees an average impulse spending of $182.98 per month in April 2020, an 18% increase after the corona pandemic!
So what exactly happens before you make an impulse purchase and how can you prevent yourself from making those reckless purchases?
What Is An Impulse Purchase?
An impulse purchase is when you buy something that you had not planned to buy, but because you suddenly want it when you see it.
It can be as simple as buying a candy bar at the checkout counter, a burrito that looks appealing on your way home from the grocery store, or the dumbbell set next to a six-pack abs figure board at the fitness equipment store.
Common Impulse Purchases
While the list of common purchases used to be shorter; it has definitely grown longer after the corona pandemic.
What motivates us to make impulse purchases?
You may be wondering what are the reasons that drive us to part willingly with our money. Here are some of the reasons that may cause us to make such decisions.
Humans tend to favor instant gratification because the thought of immediate, pure pleasure can be insanely powerful; especially when we’re stressed out.
Remember the last time you felt excited about buying something new?
That is when a chemical reaction is going on in your head called dopamine rush. Dopamine is a neurotransmitter or chemical signal in our brain that is involved in something called the reward system. When there’s a surge of dopamine being released in your brain, you’d feel happy or even ecstatic.
Though many are mistaking that dopamine surges happen when you buy and obtain something, it actually happens before that.
A study shows that dopamine surges happen when we’re “anticipating something” rather than “getting something”. Simply, before you make a purchase, you are anticipating how that thing can help you improve your life. For example, the anticipation that a dumbbell set can help you gain six-pack abs.
This subsequently leads you to make an impulse purchase. Notice that after you have actually bought something and bring it home, you wouldn’t feel as excited anymore.
The desire to avoid missing on something good. Stores have been making good use of this desire to make you part with your money.
How often do you fall for the “Buy 2 Free 1” tag, “Get 2 for the price of 1”, or “Limited Time offer”. Whether it’s a pair of jeans or dish detergents, people are more likely to buy them when they’re not sure if it’s always available or if they think they’re getting a good deal even though they don’t need them. The idea that they are getting more for the same price is enough to compel them to make the purchase despite not trying to save money.
Fear of missing out
Fear of missing out, or now famously known as FOMO was coined in 1996.
“FOMO is the psychological stress people experience when they believe they are missing out or being excluded from enjoyable experiences that others are having.”— Dan Herman
FOMO is another Achilles’ heel of people who want to save money. It has a close connection with the human tendency to look at others as an example of how to behave.
Notice those “Only 3 left in stock” or “Stock is running low fast, grab yours now before it runs out” on the website? How often do you make a purchase after seeing those messages?
Oftentimes, it gives you the idea that if the stock is running out fast, it must be good. This is also what’s causing you to make those impulse purchases.
The thought of spotting a bargain/ Twisted heuristics
Most shopping is usually too arduous and time consuming to carry out with conscious attention.
Say if you have to cross-reference every product with other products available in the market. You will have to compare the price, product composition, reviews, and the quality of services that you’ll be getting from it.
Can you imagine how much effort and time you’ll need to get those information just to buy a single item?
So instead, we’ll use the heuristics—unconsciously held rules of thumb—to help us make quicker decisions and lessen the drudgery to decide which product gives a better deal.
Retailers take this as an advantage by adding a “free gift” or “free shipping” when you buy a certain amount of their products. This gives you the impression that it must be a good bargain without doing further research.
The need to stockpile
Covid-19. Toilet paper, Flour. Do they ring a bell?
Naturally, we fear running out of resources and thus, have the proclivity to stock up on things we need to have. For example, toilet paper and flour during the corona pandemic.
Biased evaluation of use
Intrinsically optimistic, people always have a way to convince themselves that they’ll use something that they buy; eat every food they buy, wear every clothes and accessories, use any household items they pick up. Even if they were reminded of their history that they wouldn’t use them—they’d buy it anyway.
Most people tend to neglect the power of emotion. But what we often overlook is that we don’t consciously think through a decision. Instead, we often feel through decisions.
As Antonio Damasio, a neuroscientist says “emotion is a necessary ingredient to almost all decisions”. This is why you’d be more inclined to buy something when you are “emotionally engaged” with certain things.
What are the causes and effects of impulse buying?
Was there a time when you bought a new phone and you just had to buy more things to compliment that new phone? Like getting a new phone case and a new screen protector? How about a new pouch to give extra protection to the phone? Oh, and a new dongle so you can use your favorite earphones.
If it feels familiar to you, you’re experiencing the Diderot effect. Basically, it means a single purchase leading to a series of subsequent purchases in order to compliment that thing you bought in your first purchase.
How many times have you regretted or felt guilty after making a purchase? Those are the signs of buyer’s remorse.
82% of the adults in Great Britain suffered from Buyer’s remorse. Mainly because the products were not right or weren’t as they expected or because they didn’t use them as much as expected.
Spending money is so much easier today thanks to credit cards. A swipe or a wave and you’re free to bring those things home. Simple as that.
But when it is so convenient to make purchases, it also becomes easier to accrue debts on your credit card. If you’re not mindful of your spendings, you might end up like one of the Americans with an average credit debt of $5315.
Clutter at home
Buying stuff is always fun. But keep up with those impulse purchases for months and years and you’ll have a house full of stuff. (You’ll hate yourself for that when it’s time to do housekeeping.)
How to deal with impulse purchases?
Nearly every habit is initiated by environmental cues. So it is best to avoid those triggers in the first place.
Let’s say your friends ask you to hang out. If you know your friends are shopaholics and will definitely be the devil on your shoulders when you’re struggling to decide on making a purchase, ask them out to the park instead of the shopping mall.
Alternatively, get them to do sports instead. It can help you release dopamine along with endorphins which gives you the same feeling of pleasure (only without the buyer’s remorse). What’s more, your wallet can remain fat while your belly gets slimmer.
Buy items that fit your current system
One way to deal with the Diderot effect. Try to buy things that are compatible with what you already have so you won’t have to make subsequent purchases. For example, buy clothes that match your current wardrobe.
One month no buy challenge
One of my favorite ways to create a habit is to start a one month challenge. Whether it is to stop spending, start saving money, or even an exercise routine.
Shopping list and wait 30 days list
When you have to go shopping, create a shopping list for the necessary things.
If you see things that you want that isn’t on your list, add them to another list called the 30 days list. Most likely, you won’t think of buying it after that.
But if you’re still into buying it after 30 days, by all means, buy it. Because it is no longer an impulse purchase but rather, a considered purchase.
Shop alone or with a frugal person
If the devil on your shoulders always seems to make a better point whenever you’re making a decision on whether or not to buy, either shop alone or shop with a frugal person. That person will give additional support to that angel on your shoulders.
Be mindful of your reaction to impulse purchase
Whenever you see something that you want to buy, ask yourself if you need it and imagine yourself using it. Will it be suitable? How often do you use it? Have you used something similar before and want an upgrade? If not, why do you need it? If you can’t answer all of those questions immediately, walk away and look around at other stuff and come back to it later if you can justify that you really need it.
Impulse purchase starts with emotions and the human instinct of favoring instant gratification. The only way to stop it is to understand and to be mindful of your reaction to impulse purchases so you will be able to spot the trigger and think rationally before parting with your hard-earned money.
Now, I’d love to hear from you.
How often do you make an impulse purchase? Have you tried stopping it? If so, what ways do you use to stop your impulse spendings?