You vowed to only buy one book, but before you know it, you are walking out the door with three. But it was buy two, get one free, right? Wrong. You have just fallen into a common spending trap that encourages you to spend more than you planned and break your carefully formulated budget.
Spending traps are those scenarios that make you question smart financial decisions and give in to unnecessary spending because of sales, deals or pressure. Over time, seemingly harmless purchases can add up and lead to diminished savings or higher credit card debt – both of which can be damaging to your overall financial position.
Overcoming spending traps involves knowing how to spot them and recognizing how they may harm your bank account. So the next time you’re considering a purchase, ask yourself whether you’re falling for one of the below three scenarios:
1. Shopping as a habit
It’s your typical Saturday afternoon activity. You go out shopping with friends, followed by dinner and movie. You may not really need new clothes or accessories, but shopping has been a habit for so long that you don’t even question it. There are several ways to combat this spending trap, starting with suggesting a new activity. Enjoying the outdoors, cooking lunch at home with friends, visiting a museum and other activities will give you quality time with friends but help you avoid the urge to spend. If your friends are still up for shopping, you can also accompany them, but only carry a limited amount of cash and leave your credit card at home.
2. Online sales
Online shopping deals – even with free shipping and pricing discounts – can be just as financially harmful, if not more so, than shopping in a store. You may think you’re saving money by taking advantage of online deals, but you’re still spending on items you don’t need. Carve out a certain amount of money you can spend freely each month when you’re making your budget. Once you know how much you can spend and you see the prices add up online, you may rethink your purchases.
Coupons can be a great way to save money on purchases – but only if you really need them. It’s easy to justify buying things you don’t need if you have a coupon, because you tell yourself you’re getting a discount. However, even if you’re only spending $20 on an item that was marked down from $40, it’s still $20 you did not intend to spend. Only cut out coupons for items you planned to buy and stick to a list to avoid being sidetracked.