I remember early on in our marriage shopping for a new BBQ. The store had a sale on so I bought not only a whiz bang BBQ but also a heap of extras to go with it. In the end, I had overspent and busted our budget plans. It took a few months to recover from that impulse buying spree. Nowadays, when Nicole and I are discussing a possible purchase we will often say to each other, “Let’s not do another BBQs galore!”
'Impulse buying' refers to unplanned expenditures that we make based on emotion. This is the number one budget buster. Some of us get excited at the very sight of the word ‘SALE’, an interest free offer or an offer of ‘2 for the price of 1’. Just because you can afford it doesn’t mean you should buy it. If you buy something on sale, you are not saving, you are spending!
Research indicates that women do this more often than men. But men do it in larger amounts. Come on guys, that extra pair of shoes your wife recently purchased will not bust the budget as much as that new mega-size television you bought for the games room! In fact, when it comes to credit card debt, men owe an average of $450 more than women.
Advertising motivates us to buy things we often don't need and seeks to make us dissatisfied with what we have now. Advertising’s aim is to tell you, “Last year’s model is not good enough”, “What you have now is not good enough any more” and “You need this!” It creates dissatisfaction. The truth is that all material things always oversell themselves. They promise us satisfaction, prestige, power and security but rarely deliver on their promises over the long term.
Avoid situations that encourage you to spend, such as unnecessary visits to shopping centres (some people go shopping when they feel depressed), watching too much television, store catalogues, and continual exposure to advertisements. Be satisfied with what you have rather than focusing on what you don't have. Resist temptation. If you don’t then pretty soon you are living on 99% or more of your income.
Here are some questions to ask yourself when considering a possible purchase:
- “Do I really need this?” There is no point buying something you don’t need even if it is on sale for a good price.
- “Is this a good price? Is it really a bargain? It is the current model? 40% off what?”
- “Is this the best time for me to buy?”
- “Do I really need a new one?” Buy second-hand, if possible.
- “Have I done enough research?”
For more practical financial wisdom like this, pick up a copy of my most recent book "Money Tips: Practical Principles for Becoming Financially Free."