Avoid The Impulse

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Last weekend was the Canadian Thanksgiving long weekend and Mrs FN’s birthday! I took a break from posting to spend time with Mrs FN’s family, have some turkey, watch hockey, and help cover the in-laws’ pool for the cold weather approaching.

But I’m right back at it with another post on Frugality techniques!

What is one of the best habits to be more effective on managing your expenses? Besides diligently reviewing your current state, determining ideal future state and identifying how to close the gap?…avoid impulse buys! These are silent and sporadic killers of your finances. They will vary person to person, and when examined in isolation can seem harmless. I will try to point out how harmful they can be to your finances:

Example

Let’s say you have and succumb to an impulse buy about 1 every 4 days, about 91 days in a year. And the average cost of the impulse is $10 – could be a fancy latte and a scone, some phone add-on, or some junk food snacks. Everyone has different vices and I’m not here to judge.

That is $910 per year.

Now over 15 years, that money could be invested in the market at an assumed 5% per year net of inflation. By deciding to give into your urge instead, you’re dropping your lovely nest egg by nearly $20,000.

As everyone’s impulse buys can vary significantly person to person, I suggest figuring out your annual estimated expense on impulse buys, and multiplying by 21.6 to get an estimate of their cost to you over 15 years.

I’ll be the first to admit I do succumb to an impulse buy from time to time, but I try to fight off the impulse as long as possible in support of my ethos and how I desire to live my life. But I ain’t perfect.

More often than not, impulses are a quick and dirty way of feeling good now, in exchange for long-term value. I’m not saying one is necessarily better than the other, as life goals, ethos and timelines are subjective and individualistic. BUT, approach that impulse buy with all the facts and knowing whether this negatively impacts how you desire to live.

One useful approach I’ve come across is simply the “sleep on it” rule. Don’t buy that piece of clothing, shoes, or gadget right now. Take a deep breath, walk away, and sleep on it. Preferably for a couple nights at least. If you’re still desiring the purchase, or believe it to be essential, I say go for it. At this point, you’ve at least had time to let the impulse fade and turn into something weaker you don’t need to pay attention to, or stronger into something you can no longer ignore.

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