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The thing about your spending behavior is that it is always affected by what you are going through. You may have habits that you have always practiced but one event in your life can change all that - at least, if you learned your lesson well enough.
According to WashingtonPost.com, the Great Recession caused a lot of American consumers to change their spending habits. While we continued to spend for basic necessities like food, clothing and gas, these expenses were done at a minimum. That was because a lot of us had to deal with a lower income and huge amounts of debt. There was also a considerable change in certain purchases like cars and other durable items. It seemed that consumers cut back heavily on expenses that they do not need to cope with the financial crisis.
You would think that these habits would stick for at least one generation. After all, our debt level is still very high - despite the improving economy and job market. We still have a lot of financial recovery to go through.
However, one study revealed that not much has changed with the spending habits of Americans today and the pre-recession days.
Survey says: Americans still practice impulse buying
CreditCard.com recently published an article that revealed the results of a recent study that they did. This study was meant to gauge the buying behavior of consumers as of late. You would think that we are wiser now. But that is not the case.
Apparently, we are still a nation of very impulsive buyers.
In truth, our consumerist society would probably rejoice because our economy is known to be 70% dependent on consumer spending. However, if you look at our own personal financial growth, you might want to step back and analyze if this is the right habit that you should continue to develop.
The statistics revealed by the Credit Card survey is actually quite scary. The results mentioned that 3 out of 4 Americans are still impulse buyers. What makes this scarier is the fact that our mental state prompts us to give in to our impulsiveness. Our impulsive buying habits reveal an alarming lack of control and this is scary because it is what brought most of us down during the last financial crisis.
Here are important details revealed by this survey.
- 75% of respondents revealed to have made not just an impulsive purchase, but also an expensive one. 16% revealed that they spent at least $500 while 10% spent at least $1,000 on an impulse buying spree.
- 49% of respondents who gave in to impulse purchases said they were excited when they were making the purchase. Other reasons for the impulsive spending habits is boredom (30%), sadness (22%), anger (9%), and intoxication (9%).
- Men bought bigger items ($1,000 purchases) on an impulse and did so while they are intoxicated. Women tend to give in to impulse buying habits when they are feeling sad, although their spending is a lot less compared to men ($25 purchases).
- Half of the respondents said that they did not regret making the impulse purchase.
- No particular group is exempt from impulsive spending habits. Whether rich or poor, city or rural dwellers, young or old and even Democrats or Republicans - all of these categories are prone to impulse buying every now and then.
- Those who bought impulsively paid for them in various ways: cash (33%), debit card (32%), credit card (30%), and check (3%).
These data reveals that we are either slipping back into our old ways or we never really learned our lesson. The respondents said that the unplanned purchases were mostly for cellphone upgrades, a new computer or a trendy gadget.
The scary fact that might put us back where we were in 2007 is that one out of 3 Americans do not mind being in debt just to give in to these purchases. After all, 30% of the respondents admitted that they used their credit card to spend on these purchases.
How to control bad spending behavior
It is quite obvious from this survey that we have a long way to go when it comes to improving our spending habits. Have we really forgotten how messed up our finances were a few years ago? This is not something that we should take lightly. It is important that we start doing something about our impulsive buying behavior. While we may think that we deserve to spend our hard earned money, it should not be done at the expense of our future.
Here are a couple of things to remember when trying to curb your bad spending habits.
- Budget what you spend. If you want to spend, you should make sure that it is a part of your budget for that particular month. Unless it is an emergency, do not spend on something that is not a part of your plans. Not only will your budget help you monitor your finances, it will also help you determine what you can afford to spend on and what you should forego. In case there is an important expense that you need to spend on, you should choose which of your planned expenses can be delayed to make way for this unexpected purchase. The goal here is to spend within your budget so you do not overspend. Because overspending means your expenses are beyond your income’s capabilities. Any difference between your expenses and income is debt. You do not want to incur debt every month as that will put your future financial situation is a bad light.
- Keep your credit cards. While credit cards can really be a convenient purchasing tool, it can also be dangerous. It increases the chance of overspending your monthly budget. If you cannot control your spending, just keep your cards and do not bring them with you when you go on a shopping errand. You can only spend on your credit card if you are sure that you know your monthly limit and you can stick to that. If you are prone to give in to impulsive spending habits, then do not bring your cards with you.
- Plan your spending. Do not confuse this with budgeting. You may budget what you spend but planning it is going beyond your monthly expenses. Make annual plan of your spending. THis is how you are able to prepare for them. Like the holiday spending that is probably on your mind right now. According to HuffingtonPost.com, 41% of consumers plan to spend $500 or more this holiday. That is an amount that you should have planned for beforehand. Where will you get your finances? How much will you spend? If you will use your credit card, how will you pay for it? You need to ask these questions way before you are to make the purchase. Do not do them right before you make a purchase.
Trying to change your spending habits will take some time but if you follow these three tips, your chances of making an unplanned purchases will be less likely to happen.