Using a Wish List to Curb Impulse Spending

I know of no other problem in modern, consumerist America that has plagued and devastated families like impulse spending.

It is so universal that almost everyone can identify with having gone out one day to spend $100 on some needed items, and coming back $500 poorer (and usually without the stuff we needed in the first place!).

We try everything to fix it—avoiding sales, implementing the “24-hour waiting period,” falsely de-flating our bank balance or hiding money in savings accounts, but usually fail to address the issue at the core or impulse spending: Why do we buy it?

Picture yourself walking into a wholesale club later this week. You go to buy a few groceries and some dish washing detergent. But the first thing you see when you walk in are very large, very expensive, and very, very attractive flat-screen televisions.

You’ve had the TV talk with your wife and you both agree that it’s something you want to buy. You step up to the price tag and have a seemingly black and white choice to make–do I buy this or not? Ask yourself what would stop you in this situation.

Guilt? Maybe your bank balance is too low? Surely, your credit limit can handle it. Instinctively, we know that a big TV should not be an impulse buy. But why and how do we quantify a feeling?

I know of no simpler and better way to karate-chop impulse spending than by starting your own personal Wish List.

If you’re expecting a fancy spreadsheet or long directions, you’ve come to the wrong blog. Managing money is about using simple and accessible tools, and the Wish List is no different. First, let’s take a look at what a simple, short list would look like (television included):

1. New Couch for Living Room; $1,250
2. Printer for New Business; $250
3. Bed for the Dog; $45
4. Desk for my Wife; $300
5. Vacation to Colorado; $1,000
6. New Flat-Screen TV, 42″ High Definition; $850

The list above is listed in order of priority. This is critical to the success of this method, and must be done with everyone contributing to the purchase.

Consider how this helps when new, seemingly great ideas pop into your head. For example, let’s say that tomorrow you realize that your DVD player broke and you’re going to need a new one. This seems like a very urgent need, doesn’t it?

Typically, you would run out and buy a new player without even giving it a second thought, and probably regret it just as quickly. But instead, you pull out the Wish List and realize that in the larger scheme of things, a DVD player is probably less important than a new bed for the dog, but a bit more critical than a new desk for your wife (the list is fictional, honey).

Using what felt like 30 seconds of our time, we’ve now done a number things:

1. We’ve added a legitimate need to the list, which means we’ve addressed it and won’t forget about it 3 months later.
2. We’ve ranked the need in the list, which visually and intuitively gives us a much larger perspective and helps us understand that we can’t yet make the purchase.
3. We’ve prevented a trip to the store right now, and more importantly – a potential purchase when we go to the store next week.
4. We walk away with the understanding that eventually, there will be enough money to buy everything on the list, including the DVD player. But because money is finite, and a great measure of what we value and prioritize in life, we must evaluate it and spend it the same way.
5. When $2,000 arrives in the mail (we should all hope to be so lucky), and you decide that the money will be used to fulfill these needs, it takes an instant to see that the first four items will be knocked off. Which means you’ve also avoided a 2-hour debate with yourself or your loved ones about how you will use the extra cash.
6. Similarly, when some extra money is left over at the end of the month, we don’t feel guilty, but instead are empowered to go purchase the couch, because we are positive that it’s our #1 need and that the money to buy it is in place.

This technique may look deceivingly simple, but at the very least, I encourage you to start a list of today’s needs and see where you stand. You may be surprised to learn how things shake out, and the perspective you gain from this powerful exercise.

Photo by tanakawho