FREE NEWSLETTER
DECADES AGO, WHEN I was trying to save consistently for retirement, I found that my impulse purchases were standing in my way. Like many, I wanted feel-good stuff or the latest gadget, and I was willing to spend money to get it.
Once, I saw an expensive jacket in a store and badly wanted it. I was about to buy it when reality struck. I said to myself, “Let me think it over for a day. If I really need it, I’ll buy it tomorrow.”
Guess what? The next day, I didn’t think about it. I had other things to worry about, and I saved some serious money.
This was a revelation. I could avoid impulse buying simply by postponing the decision. Thereafter, this became my mantra when making any big purchase—wait a day before buying.
On further thought, it became clear to me that I was confusing wants and needs. If the expensive jacket was a real need, I would have gone back to the store the next day and bought it. But the truth is, it was a want, and I could live without it.
Now, the question I ask myself before buying anything big is, “Is this a want or a need?” For decades, this simple question has helped me save money by avoiding impulse purchases.
I preached it to my sons as they were growing up, but I was never sure whether they’d put it into practice. Proof came a few years ago. One of my sons told me he was going to buy a fancy electronic gadget on Black Friday because the deal was too good to pass up.
After a week, when I asked him about it, he said, “Dad, I followed your mantra. I waited 24 hours before clicking the buy button and the deal didn’t look all that good, so I didn’t buy it.” I was happy to know my simple strategy worked for him, too.
Impulse buying is one reason that six out of 10 American families report living paycheck to paycheck. Even among Americans earning more than $100,000 a year, four out of 10 say they live this way, according to a survey by LendingClub.
It’s not easy to resist the siren song of purchases. Products are promoted to make you want to buy them, whether you need them or not. Social media makes the situation worse. When your friends show off their new purchases online, you also want to buy them.
Impulse buying can extend to stock trading. We’ve seen momentum stocks take off as everyone piles in. Getting in on the action seems attractive. A recent example is the meme stock craze. FOMO, or fear of missing out, is an immensely powerful emotion.
Rushing to buy a stock based on an analyst’s recommendation is another pitfall. I’ve made that mistake on multiple occasions, and I’ve lost money every time.
These days, I take a more disciplined approach. First, I’m wary of buying individual stocks, instead focusing on exchange-traded funds. Even if a stock looks extremely attractive and its price is spiking, I’ll take time to do research before buying. By that time, often the crowd’s impulse buying has waned and the stock has dropped to a more reasonable price.
My advice: If you’re about to make a significant purchase, don’t be in a hurry. Make sure it’s something you truly need—and not an impulse purchase.
Sundar Mohan Rao retired recently after a four-decade career as a research and development engineer. He lives in Tampa in a 55-plus community. Mohan’s interests include investing, digital painting, reading, writing and gardening. His previous article was More Than Money.
Want to receive our weekly newsletter? Sign up now. How about our daily alert about the site's latest posts? Join the list.
I’m good with deferring product wants – but a continuing “wants vs needs” weakness is home repair DIY vs “calling a guy”.
We can usually fix some stuff ourselves and save money. But it takes a desire to DIY and patience: two things we lack!
It’s too tempting to just throw $$ at the problem. Pick up the phone and have a pro come in and work their magic.
No weekends ruined. No cursing when repeated efforts bear zero resemblance to those “easy” results YouTube Guy promised. No time-consuming Home Depot trips to buy parts (and frustrating follow up trips to switch said parts for the RIGHT parts – or some specialized tool we now realize we needed. lol)
Good points. When I am considering a big purchase, I also ask the question, ” Will this purchase change my life in a meaningful way ?”. If the answer is no, then reconsider that purchase. Example is my seven yr old IC engine car. I have thought about replacing with an EV, but did not have enough desire to pull the trigger. Sundar Mohan Rao
I’ve always been reluctant to buy a car when the one I’ve had still works well. That said, I splurged and bought an EV in 2018 and I love, love, love it every time I drive it! I did want it for a while though and saved up quite a bit. There was a car loan that I paid off after a year. When you’re ready, you won’t regret it.