When it comes to your finances, planning is everything. However, even the most carefully laid plans will fail if you’re too impulsive. Being impulsive means you act on a whim, sometimes without thinking about the consequences. Heard of the proverb, ‘look before you leap’? Those who are impulsive can do the opposite. They leap head-first into action, only stopping to look after the deed is done. This kind of impulsive behavior can lead to regret and thinking about ‘if only’. ‘If only’ I had thought it through… ‘If only’ I had paused for a second before making that decision… ‘If only’ I had acted in a different way. Thinking of the ‘if only’ can negatively affect your mental health. It prevents you from enjoying the present. Instead of making the most of each moment, your mind is mired in thoughts of the past, and how you could have (or should have) done things.
Most impulsive behavior, especially when repeated, can have negative consequences. When you’re financially impulsive, the consequences could be quite harmful. You could severely sabotage your financial health for the long-term, damage your credit rating, empty your savings, take on too much debt, and even go bankrupt. Wondering how you can prevent that from happening to you? Or have you already started to see some of the ill effects of being financially impulsive? We’re here to help. Here are six ways you can gain control over your spending and curb your financial impulsivity:
Create a 24-hour delay shopping rule
Shopping is just too easy these days. Before, you at least had to physically go to the mall or browse through a catalogue before calling in your order. Now, one can barely open any website or app without being bombarded with ads for things they would like to buy. From same-day delivery to paying with a tap, modern shopping is a landmine for anyone who is impulsive. It’s just too tempting and easy to buy whatever has caught your eye. So, make a rule, that you won’t buy anything on the spot. Let some time pass. You can add it to your e-cart or ask the shop assistant to keep it aside for you. After 24 hours if you still want it, only then will you buy it. You can always increase the interval to 48 hours, three days, or even a week or more for larger purchases. The point is to give your mind a chance to ride the impulse out without acting on it. Often you’ll find that after the set time has passed, you don’t even really want the thing anymore. With this rule, you won’t only prevent yourself from impulsive shopping, but also learn to buy things that you really like. As you learn and develop your sense of what you like, need and want, it will also become easier to control impulse shopping. In time, you won’t even find the need to have a rule or keep any kind of interval, because you will be able to tell whether you’re buying something on an impulse or out of want or need.
Put away that credit card
If you are financially impulsive, then credit cards will only add fuel to that fire. One of the key problems with impulsive behavior is that you only think about getting gratification in the present moment. You don’t think about the future. Credit cards allow you to easily get instant gratification in the present. Paying your credit card bills? That’s a problem for future you. Because credit cards make it so easy to act on your impulses, one of the best ways to stop your impulsive behavior is to stop using your credit cards. Take them out of your wallet when you’re heading to a store where you know you’ll be tempted. If online shopping is your nemesis, remove any memorized accounts from your favourite online stores. And when all else fails, make your credit cards impossible to use. Take a scissor and cut them. This may seem extreme. But sometimes, you need to take an extreme step – at least until you gain better control over your impulsivity - to get a result.
Use a GIC or recurring deposit for savings
Are your savings in a bank account that you can dip into whenever you please? If you’re trying to curb your financial impulsivity, then consider opening a GIC or a recurring deposit for your savings. How will this help? Taking money from a GIC is not as easy as withdrawing money from your savings account. You will have to pay a fee to access the funds before your investment term is over. This will serve as a strong deterrent and force you to stop and think before acting on an impulse. As for a recurring deposit, money from your account will automatically go into a savings account or investment. This way, you can make sure that when any income or salary is deposited into your account, a portion of it will definitely be set aside as your savings before you can get your hands on it.
Spend in cash only
Another great way to make sure your impulses don’t get the better of you is to set a ‘cash only’ rule. By this rule, any purchases you make, must be made in cash only. It’s easy to tap a button on your smartphone screen or use a debit or credit card to make a payment. Even though you know money is deducted from your account or the amount appears on your credit card bill, it does not have the same effect as paying with cash. When you have to physically feel the dollar bills, count them out, see their numbers getting lesser in your wallet, it makes your payment very tangible. You are more aware of how much you’re spending. The amount of time it takes to pay in cash – while not much – is still longer than paying by card or an app. That works as an obstacle when you’re acting on an impulse as you are forced to stop and redirect your attention to dealing out your physical notes. This works to prevent you from spending as regularly as you would like to, too.
Keep an ‘impulse emergency fund’
Now, all the tips we’ve shared above involve discipline, rules, or preventive measures. This tip on the other hand will allow you to give in to your impulses. Finally! Often, when you’re trying to stop yourself from doing something that just makes it harder. Like dieting, for example. You decide to eat better and suddenly, all you can think about is cheesecake! So, what do you do? We say, give in. But only to an extent. Set up an ‘impulse emergency fund’ for yourself. It can be a small amount that you can spend when you feel absolutely unable to fight off an impulse. Such a fund acts like a stopgap, allowing you to occasionally give in to smaller impulses, so you can hold fort when a larger impulse strikes without breaking your resolve. It also serves as a way to prevent you from doing too much damage when you act on your impulses, since there is a set limit to how much you can spend. Now keep in mind, you should not make a habit of using this fund all the time or there won’t be any money left in your emergency fund to use.
Seek professional support or ask your loved ones for help
If you’re finding it hard to control your impulses, it may be time to seek professional support or help from your friends and family. Don’t allow your impulses to sabotage your finances or your well-being. If you find that you have a problem with impulse control in many areas of your life, it may be a good idea to speak to a counsellor or your doctor. Lowered impulse control could be caused by other underlying issues rather than a lack of self-discipline. If you find that you only tend to act impulsively when it comes to your finances, then please speak to a financial advisor. It may just be a case of bad financial practices or a lack of understanding about your finances. Once you’ve sought professional help you can request your loved ones to help keep you on track and follow the advice you’re given. Their moral support can go a long way in helping you curb your financial impulsivity.
We hope you found these tips helpful. Keep in mind that all of us at Innovation are always happy to support you whenever you need us. We are just a call or click away to help you with your financial health and well-being.