How to know when to make an impulse purchase

Photo courtesy of Sitoo

Ramit Sethi, the I Will Teach You To Be Rich guy, has a rule about books:

Ramit Book Rule

Yes, this is a link to an Instragram post containing a screenshot of a tweet. I Will Teach You To Be Meta?

If you’re “thinking about” buying a book, just buy it. Don’t waste 5 secs debating. Even 1 idea makes it worth it.

I may not be this cavalier about books (because one might easily end up with a big stack of books one has yet to read), but from a financial perspective, this rule is sound. No one is likely to go broke from buying books.

But impulse purchases, on the whole, are dubious. Going overboard with impulse buying can cause you to blow out your money plan, and cause you to potentially have lots of stuff you don’t want or need.

Impulses happen for a reason, though. Sometimes you see something that’s perfect for you, even if it wasn’t on your radar. Why not take up the opportunity?

So here are some tips on how to handle impulse buying.

If it doesn’t fit into your plan, stop

This ought to go without saying, but if an impulse can’t be rationalized or fit under any of your Expenses categories, and if you don’t have a savings bucket for it, then you can’t buy it. Sorry.

I know that impulse purchases sometimes have a buy-it-now-or-lose-the-chance feel to them, though that’s not always an accurate assessment. And anyway, it doesn’t matter. You don’t buy something you can’t afford. That’s the rule around here. And if it doesn’t fit into your plan, you can’t afford it.

But what if it does fit into your plan, at least theoretically?

Don’t sweat the small stuff

Idea: If it’s less than $10, just go for it.

I put this as an “idea” and not a rule because I’m on the fence about it. One could take this to mean that one could buy any number of sub-$10 purchases under the “Mike-said-it’s-okay” header.

No. But if it’s an odd purchase here and there, $10 doesn’t seem so much.

Another reason I’m on the fence is because it wasn’t so long ago that $10 was not a small sum to me. $10 was a lot. A $10 cover to get into an event meant that I wouldn’t be going to it.

So, if $10 feels like a lot to you (which is okay), I’d amend the above to say:

Idea: If it’s less than a half hour of your average hourly wage, just go for it.

So if you make $30,000 a year, that’s about $15 an hour. So if something is less than $7.50, it’s probably okay as an impulse buy.

Wait a few days

The best way to ensure that an impulse purchase becomes a good thing and not a waste of money or resources is to wait. Yes, wait. Commit to waiting 24-48 hours before purchasing.

Because what happens then is that the time and distance allow your mind to settle its debate on whether something is just an in-the-moment excitement, or truly something worth purchasing.

How will you know? Because if it you were just caught up in the excitement, you won’t be thinking about it a few days later. It will be forgotten.

But if it’s still on your mind, chances are it’s a purchase worth going for.

There are very few purchase opportunities that one can’t go back and buy later. It may seem like it, but with the power of the internet, I doubt that there’s only one chance.

And if you really did lose your one chance, don’t despair. Use that disappointment to double down on your plan. Make a savings account called “impulse spending” and put some money into it each month. There will always be more opportunities to spend money unexpectedly, and you’ll be ready.

Not all impulse spending is bad. Just put systems in place so you can determine which are the right impulse purchases for you.

But enough about me. How do you handle impulse spending?

Mike Pumphrey

Mike Pumphrey

I'm the founder and author of Unlikely Radical, a site to help people succeed with money, achieve their goals, and live intentionally.

I offer a free phone consultation to anyone who is interested in changing their financial narrative. Are you ready? Click here for details.
Mike Pumphrey
Posted on August 7, 2017