A survey of 2,000 U.S. shoppers conducted by Chain Drug Review found that 20 percent, or 1-in-5 purchases, are impulse buys which equated to 1,456 impulse buys a year or almost three per week. With impulse buys ranging from purchasing a candy bar from the register side shelves to the perfect pair of heels that catches your eye, the dollar amount can add up quicker than you may comprehend. As every dollar adds up, the average amount for impulse spending comes to $450 monthly, $5,400 annually or $324,000 over the course of a lifetime according to CNBC. Depending on how badly you may feel over your unnecessary spending, I personally recommend focusing on the smaller number (monthly).
Where does all of our out-of-control money spending stem from?
Ian Zimmerman Ph.D. from Psychology Today reveals that impulse buying is related to anxiety and unhappiness and therefore learning to control it could indeed help one’s psychological well-being. Yet, there are certain people who may experience the “shop-till-you-drop” fever far more often than others. Dr. Zimmerman identifies that “people who like to shop for fun are more likely to buy on an impulse.” This is a frequent behavior that causes financial panic when credit card bills and mortgage payments are due. That leads us to the question thousands of Americans are Googling… “How can impulse buying be controlled or prevented?
Dr. Zimmerman’s answer is to understand what motivates one’s impulse buying. Another solution that has been mentioned in countless help articles is asking yourself “Did I plan to buy this, or did I get the urge to buy it just now?” If you didn’t plan on purchasing the product, whether you’re at the local grocery store or Target, you are probably experiencing an impulse buy.
Another solution relies on the understanding of budgeting. Kristin Wong, contributing writer of Lifehacker and financial author, determines that by focusing on the opportunity cost, you are able to control your spending. In case you are not familiar with this term, opportunity cost can be understood as what you are giving up in order to obtain something else. By establishing money goals, you are able to compare the amount that you are spending on an unnecessary item with the cost of an item you have as a goal.
These fundamental personal financial skills are necessary for youth to learn in order to be more in control of their finances in their future. With the help of Junior Achievement, your student can become more prepared to resist impulse buying, therefore, being in control of their money.
Check out what other teens think of managing money in the latest JA Teens & Personal Finance Survey.