Alex writes in with a great question:
I have a very impulsive and addictive personality. I find it really difficult to stick to things and I’m constantly distracted by the cool new thing or the quick snack and that makes it real hard to make any financial progress. I need some help in overcoming this side of me so I can have some kind of financial future. Trying to be “less impulsive” isn’t helping.
Impulsive behavior – particularly that which causes financial damage – is a problem that many people deal with.
To some extent, it’s a challenge for me, too. I’m often attracted to impulsively buy books and interesting food items and sometimes that can get me into a bit of financial trouble as I overshoot my budgeted hobby money without realizing it because I acted on impulse.
Those impulses can sometimes feel like the spice of life, but at the same time, they’re utterly disastrous to a healthy financial situation. Thus, over the years, I’ve had to develop several strategies to get around my impulsiveness. As Alex notes, impulsiveness itself is a hard customer to defeat, but you can work around it and divert it into healthier channels. Here are some tools for doing just that.
Automate As Much of Your Financial Planning as Possible
Rather than relying on yourself to constantly decide to make good financial decisions, automate as many of them as possible by having automatic withdrawals and automatic transfers into and out of your various accounts.
For example, if you know you want to save for retirement, sign up for a Roth IRA and instruct that investment firm to automatically withdraw an amount from your checking account every week to fund it. That way, there’s never a choice about whether or not to save up for retirement – it just automatically happens.
If you want to have an emergency fund, set up an automatic regular transfer from your checking account to your savings account. For example, you might want to transfer $20 a week into your emergency fund, so you just have your bank automatically move $20 a week into your savings account from your checking. Again, there’s never a choice about doing this – it just happens automatically, so you never have to think about it.
These types of automatic transfers take the decisions out of your day to day hands. It removes the possibility of the “whim of the moment” decision to simply spend that money on something else – it’s saved automatically for you, so you don’t even have to think about it.
Nuke Your Credit Card from Orbit – It Is the Only Way to Be Sure
A credit card is a dangerous tool for an impulsive person. It enables you incredibly easy access to fairly unlimited funds at an instant’s notice, and if you’re impulsive, that can lead to all kinds of unnecessary purchases that you’ve almost forgotten about as soon as you make them.
My solution? Nuke the credit card entirely for a while. Cut it up, delete your numbers from any online sites that store it, and learn to live on cash and/or a debit card for a while.
Simply not having access to a credit card forces you to think more carefully about many of your worst financial impulses. You can’t simply go into a bookstore and buy three new books without directly and immediately impacting your checking account and your ability to keep bills paid. That type of immediate consequence is far more likely to stick around with an impulsive person than the lack of immediate consequence that a credit card represents.
Just go away from credit cards for a while – a long while. You can always start using them later once you have a much better grip on your impulses, but for now, just stop using them. They represent too much of an easy temptation to be financially impulsive, which is the exact opposite of what you want.
Shape Your Choices So That the Financially Responsible Choice Is the Enticing Choice
I’m a big believer in the idea of the path of least resistance. To put it in simple terms, the path of least resistance is whichever option before you is the easiest way to get a sufficiently high quality return on your experience. For example, a fast food burger is reasonably tasty and fast and convenient, so many people eat fast food, even though it’s definitely not the best quality food and it’s expensive for what you get.
You can use the idea of the path of least resistance in your own efforts to curb your impulsive spending. Simply set up situations in advance so that you’re reducing the resistance against the more financially sensible choice.
A great example of this is make-ahead meals. Let’s say you like to eat a quick breakfast before starting your day, so you often stop at a drive-thru to get an egg sandwich and a cup of coffee because it’s too much effort to make a savory hot breakfast during the busy morning. Now, let’s say you had a whole bunch of breakfast burritos in the freezer that you could pull out and quickly microwave before you left, taking a hot breakfast with you. You’d likely do that at least some of the time, and thus you’d likely cut down substantially on your breakfast costs (a drive-thru coffee and sandwich probably costs $7 – a breakfast burrito and a coffee from home is probably around $1.50).
If you’re impulsive about stopping for supper on your way home, start making meals in the slow cooker by getting it going in the morning so that all you have to do is walk in the door and supper’s ready. Alternately, you could just prep some of the ingredients for dinner in the morning before you go to work so that you know that a lot of the work for a great dinner is already done for you. Eating at home is a far less expensive routine than eating out.
If you like to read but your desire as to what to read changes rapidly, just go to the library and check out several books at a time. Pick out five or 10 books on different topics or in different genres and leave them all out on the table. That way, when you get a desire to read, you already have a bunch of choices there, so you don’t have to start looking in the Kindle Store for options.
Can’t stop smoking? Get rid of all of your cigarettes and start learning how to solve the Rubik’s Cube. Can’t stop drinking? Get rid of all of your alcohol at home and fill your fridge with water bottles you’ve filled yourself. Tempted to stop somewhere each night after work? Consciously figure out a better path for commuting home that doesn’t take you anywhere near the tempting area – it’s probably a better route, anyway.
It’s all about putting a different path of least resistance in your way.
Ask for Help in Curbing Your Worst Impulses
This one’s easy. Just sit down with one of your most responsible friends, explain that you’re trying to curb your worst impulses, and ask them to give you a nudge in a more responsible direction in the heat of the moment of your worst impulses.
I have a friend who has always done this for me, almost naturally. He just nudges me in a more responsible direction almost without effort, causing me to think more responsibly about my choices. I’ve learned, over time, to just kind of let him lead and suggest things when we’re hanging out because, although he chooses interesting things to do, he rarely comes up with situations that trigger my worst impulses.
It can be hard for a friend to do this, especially if you’re a persuasive person or one who will react negatively toward someone nudging you away from your worst impulses. This is a tactic only to use if you have a very close and trusted friend who can just roll with it. Not all of us are lucky enough to have such a friend, but if you do, ask that person for help.
Most importantly, if you do ask for help, there are going to be moments where it’s tough for that person. You’ll probably react negatively toward that person in the heat of the moment, even though at a calmer moment you were strongly encouraging that person to help you curb your impulses. Remember that this friend is doing a hard thing to help you and show your appreciation when you’re in a less disruptive mindset.
Engineer Who You Spend Time With
You may find that you don’t actually have any friends in your regular circle who are responsible or trustworthy enough to ask for help in curbing your impulses. If this is true, it’s likely due to the fact that most of your social circle – the people you spend time with – are actually enabling your impulsive decision making.
If that sounds familiar to you, you’re going to have a very hard time overcoming impulsiveness and becoming financially responsible without making some significant changes to your social life. You need to consciously spend time around people who you enjoy spending time with who also happen to curb your worst impulses because they don’t engage in those things.
Let’s say you’re a big impulsive shopper with a social circle that loves to engage in retail therapy. There’s a good chance that any time you do something social, you’re going to wind up in a situation where you’ll impulsively shop and none of your friends are really going to do anything to curb it, and that’s a disastrous recipe for your financial health.
The solution here isn’t to dump all of your friends and become a hermit. The solution is to spend some time looking for new social situations within which you can build new friendships that won’t provide an easy path to your worst influences. This doesn’t mean abandoning your old friends, but simply widening your social circles.
There are many ways to do this. Join a civic group – you can usually find out about these on your community’s website. Join a church or other religious group. Check out Meetup and see if there’s anything interesting for you. Stop by the library and see what regular events they have going on. Go to some of those events, give them some time to unfold, and consciously make an effort to get to know some of the people there. Get involved with the groups that click, and invite specific individuals you click with to do other things outside of the group. If things don’t click, move on to another opportunity.
This doesn’t mean that you should start turning down invitations to do things with your old friends, but it’s simply about opening up new opportunities – and those new opportunities will point away from your worst impulses.
Figure Out What Triggers Your Worst Impulses and Remove Those Triggers
Most impulsive people find that their worst impulses tend to happen in certain kinds of situations. Perhaps it’s triggered by a mood (like boredom) or the presence of a certain friend or being in a certain place. Whatever it is, it’s well worth your time to figure out what that trigger is for your impulses and find a way to avoid that trigger going forward.
Here’s what you need to do: sit down and think carefully about the last several times you made a really bad impulsive decision that you now regret. What do those situations have in common?
Did they happen at a particular place, or a particular type of place (like a store or a bar)? Did it happen with a particular person present, or a particular group of people present? Did it happen when you were sad or when you were happy or when you were lonely? Did it happen in the day or the night? Did it happen before work or after work?
Try to identify patterns in your impulsiveness. If you can see particular circumstances that cause you to engage in the worst excesses of your impulsive behavior, strive to cut those circumstances out of your life or at least reduce their frequency.
For example, I’ve learned that I shouldn’t go into bookstores because I will often impulsively buy books without even a second thought. What do I do instead? For starters, whenever I have the desire to go to a bookstore, I make a conscious effort to go to the library instead. That keeps me away from a known trigger for impulsive spending.
Consciously Reflect on the Downsides of Your Worst Impulses
Many people don’t want to give up their impulsiveness. Often, they think positive thoughts about their impulses – they remember the fun they had or the best outcome they ever had from an impulsive moment.
A person reflecting on their impulsiveness at a club might think of a really great time they had. A person reflecting on their impulsiveness at a bookstore might think of the great book they bought at a bookstore in the past.
What they don’t remember is all of the mediocre times at the club, nor do they remember the bad times, nor do they remember the aftermath of spent money and regret and hangovers.
They don’t remember all of the impulsive and truly mediocre books they bought and barely even remember. They don’t remember all of the money spent on books that they essentially dumped at the used bookstore a year later for a penny or two on the dollar at best.
In both cases, they don’t think about the opportunity cost – what they could have done with that time and that money instead of spending it at the bookstore or at the club.
When you think back to your impulses, don’t think about the best times that you had. Think instead about the many mediocre times and the bad times and the aftermath and the costs and the lost opportunities. Think about what being impulsive so frequently has really cost you, and ask yourself whether it’s really a net positive in your life.
Such thinking isn’t meant to kill all impulsiveness, but rather it’s meant to make you second guess it a little bit so that you’re not dealing with the negatives while being blinded by the positives.
Have an ‘Impulse’Part of Your Budget and Keep That Money Separate
A final strategy that I’ve found really useful is to partition one’s budget so that there’s a chunk of money left behind each month for impulsive spending. I call this my “hobby budget.”
Each month, I withdraw a certain amount of money from my checking account for my various hobbies. I turn some of it into cash and put the rest into PayPal for online purchases. Then, during the month, I do my best to stick to that amount. (If I make an online purchase without PayPal, I just move money from PayPal back to my checking.)
If I want to buy something impulsive offline, I have to pay cash for it. I don’t carry around an ATM card most of the time, so if I don’t have the cash, I simply don’t do it. If I want to buy something impulsive online, I use PayPal for it, or if I can’t, I transfer enough for the purchase out of PayPal and use a credit card.
It’s not a perfect system. The biggest mistake I make is an occasional online impulse purchase that I forget to pull out of PayPal, or when a friend pays or repays me for something via PayPal and I forget to pull it into checking and treat it as hobby money. Still, it does put a pretty strong cap on my online and offline hobby spending and definitely gives me a measure of control.
The point of this tactic is to wall off your impulsive spending from the rest of your finances. Success in this regard goes a long way toward protecting the rest of your finances, so it’s well worth your time to experiment a little and find a system that works well for you.
Don’t Give Up!
Virtually everyone messes up sometimes on the road to financial freedom, and this goes doubly true for people with an impulsive streak. The key thing to remember is to never give up. If you make a mistake, pick yourself up, dust yourself off, figure out where you went wrong, make an effort to correct things so that it doesn’t happen again, and keep moving forward.
This is a long journey with many obstacles. Impulse will sometimes deter you a little. Don’t let it deter you a lot.