If there is ever a time when you wanted to find out how you bought things you never used, take a good look at your wardrobe. For some, it’s books. For others, it can be cutlery, perfume and watches. All of us tend to go over-board and buy things that we really do not need. The big problem with buying too many unnecessary things is that such an activity locks up the economic power of money. Here are five easy ways to avoid such blunders:
1. Determine what is important: The first step to avoid buying things you will never use is to find out what is important. Once you decide what is important, arrange them in a list according to priority. Bare essentials may be important but only a priority list will tell you what is more important than others. Travelling and music may be important to you, but music may be higher in the order compared to travelling.
Once you know what is important to you, the chances of buying things unimportant go down. Look around you to see whether you have accumulated things that you never use. The path to redemption starts with knowing and realizing our mistakes.
2. Make a budget and stick to it: Unimportant things creep into our lives because we have a lot of money that is not bound by any budget. A budget is not a mere writing exercise for your monthly expenses. It is a mission objective of how you intend to spend hard-earned money on things you need and things you love. Allocating a fixed proportion of money for varied monthly needs will mean that you will first spend the money on things you really need.
However, there needs to be some amount of discipline on your part to not go beyond the budgeted items. After all a budget is a just a piece of paper or a note on your smartphone. What makes a budget work is your desire to avoid irrelevant spending.
3. Use cash only for buying: If you tend to do a lot of shopping via cards, there will always be a tendency to spend on things you don’t need. The convenience of plastic money often facilitates instant gratifications. This is why we would recommend you to use cash.
Cash usage has a few benefits. One, you need to withdraw cash everytime you spend a lot. Given that cash withdrawal points involve some amount of walking, you will get time to consider such spending. Two, cash use cuts the instant factor about shopping or buying things based on an impulse. Swiping a card is all about inputting a PIN. But cash handling requires counting of notes and physically handing over your money to purchase something based on a momentary whim.
4. Delay purchases: A major reason why a lot of people simply buy stuff is because they never wait. When they see a snazzy new phone or a good dress, they are caught in a warp of emotions. Soon enough they think their happiness is in buying that article. This is why you must delay purchases above a ticket-size by a week.
Whenever you want to buy something unimportant, take the 7-day challenge. If at the end of a week, you still retain the urge to buy, then go ahead. Putting a week between the desire to buy something and actually purchasing it will allow your brain to process the transaction. A small window of time therefore can help you gather your thoughts and help consider whether that purchase is important or not.
5. Realize that peer pressure is not real: Some of us buy unimportant and irrelevant things based on external factors. It may not be something you like, but you want to buy it because all your friends have, or colleagues own it. Succumbing to peer pressure is as common among adults as with kids.
The good news is peer pressure is not real. Blood pressure is real especially when you see an unwanted big shopping transaction on your credit card! However, peer or social pressure is manufactured in your head. A thing or a service cannot be the key to your happiness or social well being. Nobody, except you and your family, will care about your finances when they fail due to excessive shopping of things you never used. So just ignore and stay focused on your financial well being.
(By Anil Rego, Founder and CEO, Right Horizons)