We all like to spend every once in a while and pamper ourselves with luxurious items. Shopping for many is almost therapeutic, teleporting us to a new, stress-free world. However, while there is no harm in spending on ourselves every few months, it is vital to analyse if it is self-love or impulse buying.
The journey of an impulse buyer has little to do with consequential thinking. The instant gratification and release of endorphins that we experience after buying something are often short-lived. However, the monetary impacts of the purchase are long-lasting.
If you are an impulse shopper trying to get hold of your buying habits, this article will equip you with tips to curb your spends and manage your budget.
Effects Of Fad Buying On Your Budget
Even the most frugal people exceed their budgets at times, no matter how high the good and service tax charges.
However, if you often find yourself in that situation, you could fall under either of the two categories: a person who sets unrealistic budgets for themselves, or an impulse buyer.
Impulse buyers usually have the habit of soothing their anxiety and stress through shopping. If shopping for everything from the most trivial thing to the most expensive item calms your nerves, you might fall under the latter category.
Some of the impacts of fad buying are mentioned below.
Overdrawn Bank Accounts
An account is “overdrawn” if the amount withdrawn is more than the amount present in the bank. While credit cards allow individuals to withdraw more money that available, the interest incurred is as high as 40% for some cards, and it is better to nip this vicious cycle in the bud than to incur the debt.
Increased Personal Debt
Most impulse buyers seek the refuge of their friends and family to pay their credit card debts. However, they keep adding to their personal debt while doing so. The only way out of the ever so increasing debt is to reduce, if not completely eliminate the process of fad buying.
You cannot save up money when you have debt and a habit of impulse buying. While some of you might reason that the value of your possessions is your savings, you are making the fundamental mistake of not considering the depreciation cost of your assets.
Limiting Fad Buying
There are several ways that you can control your urges to splurge. Some of the ways are mentioned below.
Identify Where You Spend
If you have recently realised your impulse buying habit and do not know what to do next, it is okay. You need to figure out a couple of things. It is advisable to keep a record of all your transactions.
Once you have tracked down what are your essential expenses and fad expenses, you can start by keeping only a specific amount of money that you need for your essential expenses in your primary account. The remaining amount can be used to either clear off your debt or as savings. Although, getting that money out of your sight as soon as it is credited is essential.
Invest In Long-Term Plans
If you are a self-aware impulse buyer who has invested money in fixed deposits or recurring deposits, pat your backs, for you have taken the first step. However, with mobile banking available for almost all the banks, the process of liquidating such assets is not difficult at all. Therefore, investing your money in mutual funds or long-term schemes is more beneficial.
Long-term schemes usually have a huge penalty on liquidating the assets before the maturity date. Therefore, even if you want to withdraw your money, you will not be able to do so. Furthermore, these schemes have various tax benefits.
While the GST on such investment options is higher, the costs are compensated by the income tax rebates they offer along with the higher returns. The gst on investment and other financial services has been increased from 15% to 18%. However, it is still less than that of 28% on items such as aerated drinks, tobacco, etc.
For many of us, retail therapy can generate short-term happiness but cause long-term fiscal complications. To prevent yourself from making any unwarranted purchases, follow the above tips and take control of your money.