How much do you spend impulsively? If it’s more than $100, you’re typical – and in trouble.

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Dvorkin on Debt

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. 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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The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the opinions and/or policies of Debt.com.

About the Author

Howard Dvorkin, CPA

Howard Dvorkin, CPA

I’m a certified public accountant who has authored two books on getting out of debt, Credit Hell and Power Up, and I am one of the personal finance experts for Debt.com. I have focused my professional endeavors in the consumer finance, technology, media and real estate industries creating not only Debt.com, but also Financial Apps and Start Fresh Today, among others. My personal finance advice has been included in countless articles, and has appeared in the New York Times, the Washington Post, Forbes and Entrepreneur as well as virtually every national and local newspaper in the country. Everyone should have a reason for living that’s bigger than themselves, and besides my family, mine is this: Teaching Americans how to live happily within their means. To me, money is not the root of all evil. Poor money management is. Money cannot buy happiness, but going into debt always buys misery. That’s why I launched Debt.com. I’m glad you’re here.

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Published by Debt.com, LLC