Are your spending habits thoughtful, considered, ...

Thoughtful, considered, and delayed spending

Are your spending habits thoughtful, considered, and delayed? Or are you an impulse buyer?

 

To some degree, we are all impulse buyers. But we aren’t talking about the lollies in your local supermarket checkout aisle. We’re talking about spending significant amounts of money such as when you buy property or a new car.

 

Among our clients, the ones whose spending habits are thoughtful, considered and delayed tend to also be the clients with the biggest financial resources (yes – the ones with the most wealth).

 

What patterns of behaviour do they share? Those who consider purchases carefully, and perhaps park the idea for six months or more, tend to have a much better relationship with money; not to mention more in the piggy bank.

 

Then what’s the opposite of that behaviour?

 

Impulse buyers sit on the other side of the spectrum. Clients we have had to let go in the past have been impulse buyers, and we get to a point where we can no longer help them. Let’s look at two examples of impulse buyers – people who buy expensive items on a whim without much thought.

 

Client 1

 

A couple who wanted to downsize their home (and put the capital gains into savings) impulse bought a much bigger house simply because they liked it. They upsized instead of downsized. Not only did their savings not grow, but they got themselves into even more debt.

 

 

 

Client 2

 

A client bought a home on Magnetic Island on impulse and against our advice (as they were already struggling financially).

 

 

In the case of the second client, they could have considered options like holiday rentals or splitting the cost of a property with a group of friends. They did not think about all the associated costs such as maintenance and repairs, and all the extra trips they might need to make to Magnetic Island for them – rather than just going for a relaxing holiday.

 

Both of these examples were associated with big costs. Again, we’re not talking about minor impulse buying (such as purchasing a $300 domestic flight to see your family or friends interstate). We’re talking about significant sums of money. As always, the consideration should be related to the opportunity cost: that is, what else could that money have done? What opportunities will you miss out on by making this purchase? What purpose do you want my money to have?

 

Delaying a purchase is handy because it gives you more time to save the initial capital, too. So if you’re keen to buy a brand new car, waiting another six months might be the difference between buying it outright and losing money in interest because you have to take out a loan.

 

If you are reading this thinking, I am an impulse buyer, I am terrible with money, I will never change! Fear not. It can change. You are not defined by these habits, and you can change them. Start small – think one step at a time. And a great place to start is by simply being a bit more mindful about what you are spending.