Impulse Spending: What It Is and How to Combat It

There’s a reason all your favorite brick-and-mortar stores have a selection of items right next to the checkout register and at the end of every aisle. Impulse spending is a very real concept that can quickly add up and create a huge dent in your wallet.

But don’t think impulse spending is limited just to physical shopping – we’re all guilty of mindless scrolling online that inevitably leads to a package showing up at our door a few days later.

On the surface, impulse spending may not seem like a big deal. What harm can a pack of gum or extra cup of coffee really do? A lot actually.

A 2022 study shows that impulse spending is up over 70% from 2020 and the average American spends over $300 per month on impulse buys – that’s an extra $3,600 you could be saving per year. If you consider that savings potential over the course of your life, the number is even more staggering.

Impulse buying isn’t just a matter of shopping too much – there’s science behind it. Our brain produces a feel-good chemical called dopamine. When we use shopping as a regular source of dopamine to boost our mood, our brain associates spending money with feeling good and a vicious cycle begins. You can even develop a shopping addiction.

But fear not, there are other ways to get that good feeling. Getting quality rest, sunshine, exercising or meditating, and listening to music are all alternate (and free) sources of dopamine.

If impulse spending is taking its toll on you, here are some simple ways to put a stop to it once and for all:

• Budget
• Sleep on it
• Don't emotional shop
• No-spend challenges
• Clear saved payment info
• Remember your goals

Make a budget and stick to it

This may seem like a given, but telling your money where to go in advance instead of just spending until you run out ensures that your bills are covered and you aren’t just throwing the excess away.

To that end, allow yourself some wiggle room here and there to shop or treat yourself. It’s good to be financially disciplined, but don’t restrict yourself to the point of punishment. Spending money can absolutely be a fun, positive experience in moderation.

Sleep on it

This is especially helpful for online purchases or high-dollar items. How many times have you loaded up an online shopping cart just to wake up the next day with buyer’s remorse?

If it isn’t an immediate necessity, wait a day or two before making the purchase. You’ll be amazed at how many times you change your mind.

Don’t make a habit of shopping when you feel bad

There’s a reason it’s called personal finance – our spending is personal to us and often led by emotion. Retail therapy, anyone?

However, it’s this same emotional spending that can add up to become a problem if we aren’t careful and intentional with the ways in which we spend our hard-earned money. It’s a best practice not to shop when you’re emotional as our brains can learn to equate shopping - and subsequently spending money - with physiologically feeling better.

Try a no-spend challenge

If there is a certain time of year that consistently proves tougher for you to save money, consider taking part in a no-spend challenge.

Gather some friends and family to participate for an extra layer of accountability or take part in it solo. Set a time frame that you commit to spending money only on essentials - rent, food, gas, utilities, etc. - and put the rest into savings.

Clear out your digital wallet

In today’s Digital Age, it can sometimes be harder to remember that even online purchases are made with tangible money. Add another layer to your purchase process by clearing out your saved card and account information on websites and your cell phone.

Forcing yourself to take the extra step to manually put in your payment information can help you decide if it’s really a purchase you need to make.

Keep your long-term goals in mind

A tried-and-true method of controlling your spending is by identifying the opportunity cost – that is, what you are giving up in order to do something else. While the brand new flatscreen TV may look nice on your wall, that may push back a home or vehicle purchase several months.

Shopping in and of itself is relatively harmless. It’s when our body becomes reliant on the dopamine hit of feel-good chemicals in our brain that a dangerous shopping addiction can take hold.

Try employing some of these techniques and rest easy knowing you’ve spent your money on the things you truly want and need.

OMB and its affiliates do not provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decision