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Dvorkin on Debt: Changing “Impulsive” To “Repulsive”

Each week, Howard Dvorkin talks about headlines in personal finance that aren’t getting much media attention – but are still important and revealing.

The unheralded research

54 percent of Americans told pollsters from CreditCards.com that they’ve spent more than $100 on an “impulse buy,” while 20 percent admitted they’ve spent $1,000 on something they just bought on a whim.

My opinion

Financial counselors often get tagged as killjoys, because we’re always encouraging our clients to save money instead of spending it.

Even a CPA like me knows it’s more fun to spend now than save for later, so I’m not surprised that 84 percent of those polled by CreditCards.com said they’ve made an implusive purchase in the past year. If anything, I’m surprised that isn’t higher.

What disturbs me is the amount of the impulse purchases. Even $100 is enough to cover a monthly water or cable bill, but $1,000 is a heck of an impulse.

Equally troubling – and not addressed by this poll – is how often people let their impulses get the better of their wallets. In my experience, impulsive buying is a little like eating potato chips: You never stop at just one.

The average income for U.S. families last year was just over $53,600. If you add up one impulse buy at $100 per month, that’s $1,200 – or 2.2 percent of the entire year’s worth of earnings.

My solution

I’m not the only financial counselor who understands how important indulgences are. I encourage everyone to actually budget for them – because even if you’re digging out of debt, you need to blow off steam.

How much should you spend to indulge? I found a fine answer within the CreditCards.com poll: “In the past three months, the most common impulse purchase was under $25.” Sometimes, the smallest purchases can have the greatest impact. A weeknight date with your spouse at a burger joint can be more satisfying than a pricey dinner at a fancy restaurant on the weekend.

Remember, it’s not about how much you spend, it’s about how much value you get.

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