"I spent Rs 5,000 on a pair of sunglasses, because I couldn't sleep until I got them. A few months back, I spent around Rs 20,000 on Xbox 360 and video games. I wanted it one day out of the blue, and I bought it the next day, because once again I couldn't sleep until I got them," recalls Apoorva Singh, 24, a resident of Gurgaon. Siddharth Sharma, 28, who lives in Mumbai, says, "I was a little stressed out and depressed, so I ended up buying over Rs 8,000 worth of stuff I did not need in one shopping trip. I felt so guilty afterwards, especially since I'm on a budget and trying to save money. I am returning most of it and selling the rest on eBay to get the money back."
There are many people like these two who don't think much about money while shopping but later end up feeling bad about ruined finances. Research, too, suggests that emotions play a big role in people's shopping decisions, something that marketers around the world aim for when they work on advertisements or other forms of promotional messaging.
This, say financial experts, can be damaging to your long-term financial goals. "Many of us use retail therapy (to uplift our mood) from time to time. However, shopping on impulse can be a dangerous business. To resist and to keep more money in your pocket, 'create a bucket of investment and then splurge'," suggests Lovaii Navalkhi, Chief Financial Planner, Founder and CEO of International Money Matters.
The idea is not to deny yourself of anything, but to curb the habit of impulsive spending, which may negatively impact your life. We share strategies that can help you avoid such buying decisions and help you balance your budget.
BEATING THE URGE TO SPEND
1. Plan the purchase: Go shopping with a list and do not randomly roam around the aisles looking for "bargains", says Suresh Sadagopan, Financial Advisor and Founder of Ladder7. In order to stay within your means, list your expenses in advance so that you do not cross your budget. Ultimately, to stay within your budget and to avoid buying impulsively, understand your sudden urges and dodge them. Refusing to buy something on impulse will make you a smarter consumer and, possibly, a happier person too. Besides, you get to keep more of your money.
2.Differentiate between needs and wants:
Needs are different from wants in that their deficiency results in a negative outcome. Webster's defines a want as a desire or a wish for something. So, whenever you are bitten by the shopping bug, ask yourself whether the potential purchase is a legitimate need or a want. If it is a want, rather than a need, give yourself time to think about it. Is it something you've wanted for a while, or are you interested only because it's on sale? Make spending decisions with an open heart, an open mind and open eyes.
3. Time rule:
Cooling-off period: Try to be patient. If you see something you like and you think it's a must have, make yourself wait. Take a walk, let your mind process all the information for a while and see how you feel about it in a day or two, when your emotions have cooled and you're thinking more rationally. Chances are that if it was an impulse buy, you are going to forget about it, but if it was essential, you'll remember it. "Always remember that if you buy the things you don't need, you'll have to sell the things you do need," says Navalkhi.
4. Give yourself a splurge budget:
It's on us to manage things that encourage us to buy more instead of saving more. It's on us to break out of the shackles of things that make it tempting buy things in the short term (for instance credit card debt) that can cost us dear in the long term. Have a budget and spend within that. Clearance sales are tempting, but you wouldn't want to blow your budget before the year has really begun, would you?
5. Beware of the pitfalls of online retail:
"I buy things as it makes me happy but then when I get home guilt takes over and I feel even worse. The internet, too, is a nightmare, as it's too easy to buy things online," says Aishwarya Mishra, 32, who lives in Pune. The sheer number of options that are available online are mind boggling and makes things even more difficult for shopaholics.
Being aware of these traps can help. Sadagopan too has an advice: "Carrying cash and not credit cards can curtail the chances of overspending."
6 Don't give yourself easy access to your money:
Beware of the downside of credit cards. "Credit cards are not bad. Wrong usage is. Going into revolving credit is what should be avoided," says Sadagopan.
Credit card is an excellent resource but makes people overspend due to the ease with which it can be used. When they have to count cash before purchasing, they are much more careful. It is a behavioural issue. "If used smartly, credit cards can help you save money through shopping points and discounts," says Navalkhi.
7. Fear of losing out:
"An illusion is created that you'll save money when you spend," says Navalkhi. Be wary of the tricks, including sales, that retailers use. So, when you see those 'SALE' signs telling you about a certain discount being for a limited period, don't feel that you must buy as you may have to pay more later.
8. Don't shop to cheer yourself up:
'Impulsive behaviour has a long history of being associated with immaturity, primitivism, foolishness, defeats of will, lower intelligence, and even social deviance and criminality' (Bhm-Bawerk ).' Be aware of your habits, such as whether you tend to make impulse purchases when you're happy or sad. Impulsive buyers, when experiencing less happiness, may buy things just to improve their mood.
If you get a lot of enjoyment from shopping, you may be buying just to experience pleasure, which makes you prone to impulse buying.Understanding these aspects may help you have control over your emotions.
9. Don't make shopping a social thing:
Impulse buyers are more social, status and image conscious and buy to look good in the eyes of others. They also tend to experience more anxiety and diffi culty controlling in their emotions.
Impulsivity becomes a problem when it starts to control your actions beyond logic or happiness.
10. Find other ways to have fun! :
"Sometimes I hang out with my friends in malls and something random catches my eye. I end up buying it without even properly realising it," says Arya Goswami, 19, who lives in Assam. So, don't walk around window shopping for entertainment.
It can take some fun out of your mall visits but could help you save enough to indulge yourself when you actually have to.
11. Recognize that a little impulse buying is not that bad too:
Sometimes, impulsiveness turns out to be a good investment. In a world with ever more choices, it's easy to overlook the cost of making decisions, what researchers refer to as decision fatigue. Each decision affects the one that follows. Knowing that there is a cost to those decisions can help us weigh our options and then put them in context.
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