Friday, April 25, 2008

A Strategy for Dealing with Irrational Impulses

Most of the time I discuss rational approaches to handling money. But people (including me) have irrational impulses. I know I don’t need a cool new car, but it sure is tempting to trade in my perfectly good old car for a shiny new one.

The easy part of handling money well is to make a plan. The hard part is to stick to that plan 365 days per year. Breaking the rules a few times for small amounts is harmless, but buying an unnecessary new car can throw off your finances for years.

To cut down on impulse buying, try the $100 a day rule described in this post over on the No Credit Needed blog. If you want to buy some gizmo for $100, you have to wait a day before you buy it. For a $200 gizmo, you have to wait 2 days. For a new $700 computer, wait a week. This is a simple rule that forces you to take time to make sure you really want or need the latest new toy.

This won’t work for everyone, but it could be just the right idea to help some people cut down on impulse buys that they later regret.

No comments:

Post a Comment