Get Control of Impulse Purchases

With these five simple steps, train yourself to hold back on buying things you don't need.
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Impulse purchases kill budgets.

Adopting changes in the way you shop can help make impulse purchases disappear. Sometimes a completely different approach is what you need to achieve the results you want.

Many people have decided they want to rein in spending due to current economic conditions, but they often find it's more difficult to accomplish than they anticipated. Even though they know they shouldn't be spending as much as they are, they have fallen into a habit that is hard to break. Here are five simple ways to reduce the amount of impulse purchases you make.

Price it in work hours: Many people buy things because small price tags don't seem like much. What is $5 here or there? Instead of looking at the price of something as a dollar amount, switch your thinking to what it costs as a part of your earnings. Take the item's price and convert it into the number of hours of work it takes to purchase.

This is easy to do. Calculate your take-home pay and divide it by the number of hours you work. Don't use your yearly salary. A simple example would be that if your take-home pay is $2,500 a month and you work 50 hours a week ($2,500 divided by 4 weeks divided by 50 hours), your hourly rate would be $12.50.

You can then convert the price of the things you buy into the number of hours it takes to earn them. Is that movie worth an hour of your work time? Are you prepared to work two days for that piece of clothing? And the latest gadget? By considering how long you have to work for each of the items you want to buy instead of looking at the price, it will make you stop and consider whether the purchase is truly worth the price.

Set goals: A lot of times people buy on impulse because they haven't figured out their personal-finance goals. Understanding how you want to spend your money can make it much easier to resist impulse spending, because you are working toward something you want. Maybe it's to have a down payment on a house, to afford a trip to visit friends or to build an emergency fund.

Remind yourself: A lot of impulse purchases occur because you see something you want and fail to take a moment to think what that purchase is taking away. That newspaper or cup of coffee may only be a few bucks, but that adds up over the year. Placing a reminder of what you want to spend your money on can be the little jolt you need. Place your credit card in a sleeve or put a paper band around your cash with your financial goal written on it.

Choose your payment form wisely: Different people have certain payment forms that make it less likely that they will spend money. Some people look at cash and make an effort not to spend any of it while others know it will fly out of their wallet as soon as it enters. Some people have an aversion to spending on credit cards because of the fear of going into debt while others see it as free money and take it out without even thinking twice.

Use a list: You have probably heard this recommendation a thousand times and probably still don't follow it. Lists take time and thought to prepare and it's easier to forgo the effort and just head to the store. It is exactly that thought and effort that make the list so effective in avoiding impulse purchases. It may take some time to get yourself in the habit of writing lists for shopping trips and strictly sticking to them, but if you do, you'll find that your spending will greatly decrease.