Dan Orfin Highlights 3 Ways to Control Impulsive Spending

What would you do with an extra $5,400 after-tax dollars a year? Pay down debt? Upgrade your car? Improve your house? Well, you might not be as far away from your $5,400 a year savings goal than you imagine, because research has revealed that this is the amount that consumers burn on annual impulse purchases.

Dan Orfin, the founder of insurance and retirement planning firm Orfin & Associates, states that many people are wisely hyper-vigilant about not spontaneously splurging on big ticket items like technological devices. However, some of these same people neglect to realize just how much money they waste on unexpected purchases in grocery stores, retail stores, restaurants, and especially online when they encounter what seems like an amazing deal on an item they don’t actually need.

So, what can people do to avoid falling into the impulse buying trap? Dan Orfin, whose firm Orfin & Associates serves clients of all ages and life stages, says that it boils down to three factors.

1. Always have a list of essential items

Shopping without a list is a formula for overspending, especially in grocery stores, where it doesn’t take long for colorful, attention-grabbing displays to encourage individuals to fill their carts with many unplanned (and often unhealthy) items. But even for larger ticket items like buying TVs or even cars and homes, individuals should have a list that clearly differentiates their wants from needs.

Dan Orfin states that a list is like a lifeline that keeps people from getting overturned by the impulse buying tidal waves. Of course, it’s not a crime to deviate from one’s list from time to time when it makes sense to do so. However, this should be the exception and not the norm.

2. Understand the connection between dopamine and impulse purchases

Dopamine is an organic chemical messenger that plays a critical role in making us feel good after performing an activity, demonstrating a behavior, or sometimes even thinking a certain way. As a result, we feel motivated to repeat this practice. However, this motivation is often counterproductive as it drives us to perform tasks that aren’t in our best interest, and that’s where impulse purchases come in. Simply put, some individuals recklessly purchase items to experience a dopamine rush. Unfortunately, this story rarely has a happy ending. Eventually, the cost becomes unsustainable, and that’s when creditors call in debts, collections agents jump on the warpath, and sometimes lawsuits and bankruptcies get filed.

3. Wait before making a significant purchase

The majority of people who make regrettable impulse purchases (and most such transactions are indeed regrettable) are intelligent, and exercise sound decision-making in many other areas of their life such as in their job and at home. However, it’s that small window of time where they lose control and awareness, and before they know it various unnecessary items are riding home alongside them in the car. One tactic to break the spell is simply to hit the pause button.

According to Dan Orfin: often, the best thing that people can do when they feel tempted to make an impulse purchase is to take a few seconds, minutes — or longer, if possible — so they can collect their thoughts and reset their paradigm. People who do this will be amazed to discover that they not only buy much less, but they are more satisfied with what they do ultimately end up buying. It’s the best of both worlds, and it’s all because they gave themselves some time to really think things through.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.