Impulsive Purchases and Financial Decisions You Need to Avoid

Everyone's personal finance journey is different. The path isn't always clear-cut, so even the best of us find it difficult to make wise financial decisions sometimes—especially now that inflation is at an all-time high and impulsive purchases are always within reach due to the convenience and accessibility of online shopping.

That said, it’s okay to stumble and fall when it comes to your finances, as long as you know the importance of bouncing back. Take note of these impulsive decisions and buying behaviors to avoid.

7 Impulsive Financial Decisions You Need to Avoid

Splurging on Impulsive Purchases

As inflation ushers in a period of uncertainty for Filipinos, it’s normal to feel bleak about the future. It becomes wrong only when you use it to justify impulsive buying behavior.

Obviously, this isn’t the time to use your hard-earned savings to splurge on impulsive purchases such as daily fast food deliveries. Instead, roll up your sleeves and cook your own food instead, so you can also save on groceries. 

But remember, these uncertain times aren’t a life sentence. You still have a future to look forward to.

Overspending with Your Credit Card

Speaking of impulsive spending, have you ever felt intoxicated by how easy it is to splurge using a credit card? With a cash advance, for instance, you can withdraw money using your credit card. But that money isn't actually yours—you just borrowed it.

Remember to always think twice before using your card. It's not a cash card, so you should be able to afford each swipe. If you can't pay for your impulsive purchases in full, then don't use your card at all. 

Master the art of delayed gratification, so you can curb your impulsive decision-making. If you’re itching to go on an impulsive shopping spree, why not focus on what you already have and enjoy the now? You won't just save yourself a bunch of money, you'll also gain an appreciation for the things you have.

Resigning Without a Stable Income

The Philippine economy might have grown considerably,^[1] but with inflation currently at its peak, you need to map out your financial backup plan before you leave your job.

Whatever your reason for quitting, remember to save up at least six months' worth of your salary before you hand in your resignation letter, especially if you don't have a new job lined up.

Of course, this is just a general rule—you still have to factor in your lifestyle expenses and debts, if any. Then adjust the amount accordingly. 

Starting a Business Without Enough Resources

They say starting a business is a leap of faith, but don’t let that adage hold true when it comes to your finances. Sure, launching your own business might be your lifelong dream, but that’s not reason enough to bet every single cent you have on such a risky venture.

In the meantime, stick to your current day job and stay patient when it comes to earning capital. You'll need a fallback just in case your business fails to gain profits.

Forgetting to Compare the Best Loan Deals

If you do end up needing a bit of extra cash, your first instinct might be to go with the first loan offer you see. However, you'll end up missing the fine print, which entails fees, penalties, and terms and conditions. This impulsive decision will most likely end up backfiring on you. 

Fortunately, since everything’s online now, scouring for the best financial services and comparing prices and alternatives just got a lot easier. Through platforms such as Moneymax, you can compare financial products like personal loans online.

Withdrawing All Your Investments and Savings

Inflation or not, you can't just hit pause on your investments or savings. After spending years growing them, don’t waste your efforts because you feel like you should be putting the money to use for day-to-day expenses, or worse, you want to use it on impulsive purchases.

Sure, you might need to spend those funds for emergencies. But as long as they’re not happening, continue building your savings and exploring other investment options. It’s not over until the financial world says it’s over.

Panicking About the Future

Most impulsive purchases we make stem from the panic we feel about the future. With the peso at its weakest,^[2] it’s understandable, but that doesn’t mean you have nothing else to look forward to.

Focus your financial efforts on the good things and treat this as a minor setback for your future. Stick to your budget as much as you can, learn how to stop impulse buying, and don’t panic.

Lastly, take care of yourself. There are still ways to indulge yourself without going beyond your budget, after all.

Final Thoughts

If you've already made a few of these—admittedly, most of us are guilty of a couple of impulsive purchases—and you’re already feeling the effects, don’t just give up. You can always pick yourself up and do better next time. Take the lessons you learned from your impulse purchases and take them to heart to avoid a financial disaster. 

Sources:

• ^[1] Beating expectations, Philippines posts faster Q3 growth despite inflation (Philippine Star, 2022)
• ^[2] Value of peso declines further to P0.85 per P1 (Manila Standard, 2022)