Money Smarts Blog
5-step guide to prevent ridiculous purchases
Oct 26, 2021 || Kristen Anderson, Content + Communications Strategist
Have you ever purchased something and instantly regretted it? Or better yet have you purchased something and thought “I don’t need this, nor can I really afford it, but I WANT it"?
We call that an impulse buy, and according to an April 2021 survey done by Slickdeals, the leading crowdsourced shopping platform, the average American spends $276 per month on impulse buys – up from, get this, $183 in April of 2020 and $155.03 in January of 2020.
That’s over $100 more in impulse spending PER MONTH in just over a year’s time…
(For those that don't like to do math, that's over $3,300 a year)
Impulse buys can be small purchases over time that add up or in my case, can be something big.
Cue, new Apple Watch.
It’s $20 off! I must have it…plus I can track my workouts with it, which will obviously make me actually use that gym membership I have…and you can answer your texts and calls on it?! No way…this is just too cool.
Well, after giving it 30 seconds of thought I came up with more than a few really good reasons why not. The first is that the holidays are coming up, and my family is ALWAYS asking me for a list. Why buy this now when a gift card to the Apple Store would be the perfect gift?
Second, I already have a Fitbit…that I never use, so what would make this watch any different?
I fell into the trap of “everyone has one, and it seems cool, so I want one.” Not a good answer.
Luckily before I clicked that beautiful “Create your ideal watch style” button on Apple.com, I went through what I’m now calling my 5-Step Guide to Prevent Ridiculous Purchases.
STEP 1: Can you afford to pay with cash?
In the case of my beloved Apple Watch, the answer for me was yes, IF I dipped into our emergency fund…The thing is, no matter how badly I wanted to turn on my watch’s fitness tracker while answering a call at the gym, having the latest gadget is not an emergency. So, I really couldn’t afford to pay for it with cash.
Another temptation to spend money you don’t have: credit cards. But your available balance isn’t cash, nor should it be treated as such. Carelessly using your credit card to make silly purchases you can’t afford to pay off right away is a great way to start drowning in debt.
Rule of thumb? Avoid making a large purchase with your credit card if you can’t afford to pay it off with actual, non-emergency-fund cash right away, and only use your emergency fund for actual emergencies.
So if you’ve asked yourself #1 and determined that yes, you do actually have enough cash on hand for this impulse buy. Move on to Step 2.
STEP 2: Does it fit your lifestyle?
You don’t have to dip into your emergency fund, you don’t have to borrow money from your brother and if you swipe your credit card it will be to take advantage of cashback or some other rewards and then you’ll pay it off pronto (because you actually have the cash).
That means you can buy it, right? Not necessarily, friend. Just because you can afford something doesn’t make it a good buy.
Take a minute to consider whether or not this purchase will fit into your day-to-day life. Circling back to the Apple Watch example; Theoretically, it would have fit my personal lifestyle, but let's take the example of purchasing a pop-up pool from Amazon…(I know some of you thought of it during quarantine…)
The set-up for one of these pop-up pools can be tedious and labor-intensive, not to mention the ongoing maintenance and cost to keep the pool from turning into an algae farm/giant stink pit. Do you have the time, money and motivation to keep up?
If whatever you’re considering purchasing would require you to make a change to your lifestyle, my advice is to just walk away. Even if you have the best intentions, it’s unrealistic to think you won’t revert to your old ways. Easily distracted? Say no to the Apple Watch. Hate the idea of adding another task to your to do list? Walk away from the pool.
Rule of thumb? Be real with yourself about what you can actually take on without changing your lifestyle.
STEP 3: How long will it last?
Or, in other words: does the expected lifetime of this thing you’re about to buy align with the amount of moola you’re about to drop?
Usually, price indicates quality which in return indicates lifetime.
That’s to say that, generally, the more you pay for something, the longer you expect it to last. I dropped a pretty penny on a pair of high-quality, handstitched leather boots about a decade ago. They’re still in perfect condition, and I fully expect them to become a family heirloom. To me, that justifies the price.
On the other hand, you may not feel too guilty if the $2 Old Navy flipflops you bought in May blow out before next spring. That’s a pretty good amount of wear time considering the price, and you could reasonably replace them every summer without anyone accusing you of frivolous spending.
Rule of thumb? With the exception of really great clearance finds, if a deal seems too good to be true, it probably is. Do some research to determine the overall quality and how long it lasted for other people. Reviews are your friend! If you’re dropping a couple hundred bucks on something that may only get you through one season, it may be wise to pass on it and look for something with a longer lifespan.
STEP 4: What kind of return will you get?
I’m not saying every purchase should make or save you money, but you should get something out of it. A monetary return is great, but something that will improve your physical, mental or spiritual health can absolutely be worth it, too.
Yes, my Apple Watch could help me become more active…but will I constantly be looking at it when I get texts and calls? Maybe the cons outweigh the pros.
Purchasing the pool for my backyard would mean I no longer have to visit the public pool, which would not only save me money by eliminating the cost of admission (in several years), it would also improve my mental and spiritual health because I’d get to float around with an ice-cold cocktail in silence instead of laying on concrete while some screaming kid cannonballs into the shallow end. Hmm…
Rule of thumb? If it brings some kind of value to your life, it’s worth considering the purchase (if it passes all of the above questions).
STEP 5: Have you slept on it?
No matter what – do this step! Even if something checks every box on the list and seems like a perfect fit, it’s almost always a good idea to sleep on it before you make a big purchase. If you’re anything like me, you’ll wake up with a clearer mind and hopefully an improved perspective of how this item will fit into your budget and your life.
Who knows, you might even wake up and find the thing has been marked down a couple bucks. Either way, it’s worth giving yourself some time to fully consider something before you buy it. And after you’ve slept on it, it can’t be considered an impulse buy anymore, right?