Saving money by sticking to a budget can be hard.  It gets even tougher if you have compulsive or impulsive spending habits. 

If you tend to overspend on shopping, there may be a psychological reason why.  Get to the root of your spending habits by better understanding how and why you buy things.  With this knowledge, you will be able to better manage your budget and minimize excess spending.

Two types of spending can hurt your budget and can be avoidable with some help: impulsive and compulsive spending.

What is Impulsive Spending?

Impulsive shopping is when you buy something that you were not planning to buy.  This usually means that you spend more than your budget.  This can create problems with being able to save and invest at your target level.

A good example of impulse spending is if you walk by a store and see something you love in the window.  If you buy it without thinking, you just made an impulse buy.  Impulsive shopping can include buying extra food at the grocery store just because you are hungry.

Impulse buying can be ok in small amounts and on an infrequent basis.  Every so often, it is good for your mind to buy something small that makes you happy.  However, it becomes a problem when your purchases start to impact your monthly budget.  If you cannot pay for your basic expenses or reduce your savings rate due to impulse spending, you will probably want to address this habit.

Signs of Impulse Buying

Impulse buying is pretty simple to identify.  Essentially, it is any purchase that you did not plan and budget for. 

Buying clothes for the kids to go back to school should be in your budget.  Buying your 15^th pair of shoes just because they are pretty, probably is not in your budget.

Another sign is how quickly you decided to buy something.  Impulse shopping is generally decided on quickly, sometimes within minutes.  An example is seeing an ad on a website and immediately buying it because it seems like a good idea at the time.

Causes of Impulse Shopping

There are a few reasons why impulse shopping happens and sometimes it is hard to avoid.  With the increase in digital marketing, we are inundated with ads, emails, and offers all across the internet.  It is hard to go even a few minutes without seeing a new product that catches our attention.  To some extent, impulse buying is not our fault because there are opportunities to buy things everywhere.

Poor planning is one reason why impulse buying can occur.  By not planning ahead, you may end up picking up extra items that you do not really need.  Not using a grocery list is a good example since it is much easier to grab extra things that are outside of your budget.

Part of the psychology of impulse buying is that it may be a way that you deal with external stress.  If you had a particularly tough day at work, you might feel more inclined to treat yourself with a new purchase.  While this is fine within reason, too many impulse buys can negatively impact your budget.

How to Avoid Impulse Buying

To keep your impulse buying in check, here are some tips on how to address it.

• Identify your impulse buying.  The first step is to recognize that you are making impulse purchases outside of your budget.  By accepting this, you can take steps to prevent that type of buying.
• Create a budget. If you do not have one yet, creating a budget is important to improve your finances.  Track all of your income and expenses over several months and then determine how much you can spend and save.
• Use a grocery list. When you go shopping, stick to a predetermined grocery list that you know falls within your monthly budget.  If it is not on your list, you should not be buying it.
• Wait before purchasing.  Try to manage your impulses by imposing a mandatory 7 day waiting period for anything that is not standard living expenses.  If you still want to buy it after a week, then you can proceed, but this helps to give you time to think it over.

What is Compulsive Shopping?

Another form of spending is compulsive shopping.  Compulsive spending is different in the fact that it is more of an addiction to shopping.  It is a need to buy something just because it makes you feel good or it is how you cope with stress.

While impulsive shopping is a one-off purchase that is unplanned, compulsive shopping is the continual spending that is a habit.  Compulsive spending often makes the person feel good and it is difficult to stop because they are truly addicted to shopping.

Signs of Compulsive Buying

One sign of compulsive buying is that the person cannot stop thinking about shopping and has made it a priority in their life.  This can come at the expense of work, family, and other personal priorities.  Often, they will become more stressed if they cannot shop, and they use shopping as a way to cope with stress. 

Another sign of compulsive shopping is that they have tried to cut back on their spending but have been unable to.  Similar to other addictions, compulsive shopping is often difficult to treat.  In most cases, compulsive shopping will hurt their budget.

Causes of Compulsive Shopping

Compulsive shopping can be caused by several psychological factors, such as having OCD tendencies.  For these people, they need repetition and perfection in their life that they fill by shopping.  Other people may simply have some sort of void in their life and they turn to shopping as a way to find happiness.

How to Avoid Compulsive Shopping

Compulsive spending can be difficult to address alone because it is a form of addiction.  It is always encouraged to reach out to a professional to assist with addiction but here are some ideas to save money.

• Acknowledge your compulsion.  It is often difficult to recognize and admit that you are a compulsive shopper. Even if you do not think it is a big deal, acknowledge that you are addicted to shopping and work with a professional to address it.
• Avoid using credit cards.  Credit cards can be a great form of payment, but they also make it super easy to buy more stuff. Try using either cash or a debit card that has limited funds.  This will help to limit how much you can spend.
• Avoid the temptation. If you know that shoe shopping is your weakness, remove yourself from situations where there are shoes for sale.  Try to avoid going to stores or websites where you know you might be tempted to buy something.
• Use something else to fill the void.  Take up a new hobby or find something to focus your effort on besides shopping.  If you have less time to think about shopping, you will be less likely to be tempted to spend money. 

Bottom Line

Both impulsive and compulsive shopping can wreak havoc on your monthly budget, hurting your ability to save and invest.  In both cases, it is creating extra spending that could otherwise have been avoided.

Since it can be difficult to address these habits, do not be hesitant to get help from a professional.  By understanding and addressing your spending habits, you will be able to save more money by cutting out extra expenses.