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10 Effective Ways To Avoid Impulse Buying

10 Effective Ways To Avoid Impulse Buying

I might not be good at too much, but saving money is something I’m absolutely anal about. My family has taken to calling me “Fishhooks,” implying I line my pockets with sharp objects in order to resist the urge to reach in and pull out some cold hard cash whenever something at the store catches my eye. The truth is, I just use my head when I’m at the mall, and don’t let the sales traps get to me. Whenever faced with the prospect of purchasing something, I usually go through at least a few of these thoughts before making my decision:

1. Calculate how much work it would take to pay for the item

This is a big one, and I always get made fun of for it. My wife even anticipates it, and will launch a preemptive mimicry of myself saying “That’s like, three and a half hours of work!” whenever she’s looking at a new dress or something. But really, I look at the item’s longevity and meaningfulness, and figure out if it’s worth it or not. For example, when looking for a new PS4 game to buy, if I see a game might take 60-80 hours to complete, that equates to less than a dollar per hour. Totally worth it over time. On the other hand, a two hour movie would cost me around $40 (yes, I would treat my wife, I’m not that cheap), or $20 per hour. See the difference?

2. Don’t carry all your credit cards

If you have multiple credit cards, and plan on hitting the mall, just take one for emergencies and planned purchases. And check your limit before you go out. That way, you know how much you can spend while still having some left over in case disaster strikes. There’s not much worse than spending a few hours on a shopping trip, only to get a flat tire on the way home and be out $400 instead of $200. Keeping your other credit cards home saves you from spending way too much, and ending up getting in over your head.

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3. Don’t go therapy shopping

There are so many better ways to ease stress that don’t involve spending any money. Shopping when stressed can lead to a vicious cycle: you’re stressed, so you buy stuff, then you’re stressed because you spent money, so you buy more stuff…and it continues. Not that gambling while stressed is something I would ever advocate, but at least there you have a chance of getting some money back! Just kidding. If you’re stressed out, try going for a walk or listening to music, but avoid spending money at all costs.

4. Block shopping sites when using your computer

I shouldn’t talk, because I have ten other tabs open right now. However, I haven’t clicked on a single one since I sat down to write this (I know, go me). But really, I remember the college days, in which I would rather have been doing almost anything than sitting down to write ten pages on Chaucer. The internet has made it way too easy to buy buy buy, without thinking about the purchase first. If you need to, block all other sites while you’re trying to get work done, and save the shopping spree for another time.

5. Don’t go shopping in groups

I know that’s pretty counter-intuitive to most “shopping trips,” but really: When I go shopping with my wife, we almost always end up picking up something we didn’t plan for. I’m not blaming her, either. Either one of us end up saying “Why not?” when the other one asks “Should I…?” On the other hand, whenever I go out by myself, I make it a point to buy only what I planned to buy. Not only to I make the plan and stick to it, but having the plan helps me stay focused and ignore other sales going on around me. My wife on the other hand…

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6. Don’t drink and shop

Common sense people! Okay, if you’ve had a few, common sense might not be your strong suit right now. Don’t worry, we’ve all been there. But just like you should avoid texting your ex at 2AM, you should also avoid Amazon like the plague. Even Fishhooks over here once woke up to see a new computer monitor in his “recent purchases,” even though he doesn’t even use his computer for gaming. Luckily I was able to cancel it, and no harm was done. But I did learn my lesson: Amazon is not a drinking buddy.

7. Put away money you were going to spend

Easier said than done, right? Well, it will pay off in the long run. Add up all the extra “stuff” you’ve bought over the past year, then look up prices of trips to Aruba. I definitely know some people who spend more on the former. And even if you don’t have enough for a trip to the Caribbean, you’ll have enough at the end of the year that you can splurge on a few things and not feel bad about it. And you might be able to pay off some of those credit card bills, to boot.

8. Donate to charity

Nothing will make it more clear to you that you don’t need another new pair of shoes than seeing someone on the sidewalk who actually does. Sometimes it’s best to take the money you were about to spend on yourself and give it to someone who truly needs it. If you were going to spend the money anyway, at least put it towards a good cause. Just think: the new gadget or dress you were about to pick up might improve your life a little, but buying a week’s worth of groceries for someone in need can change their life completely.

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9. Spend money on others

Like me. My address is…

Just kidding. But like I said, if you’re going to spend money anyway, spend it on a friend or family member to give thanks. No matter what you get them, it will surely be much more meaningful than whatever you were going to buy for yourself. I like to think that money has no actual value (it helps to think that way when you’re broke!), but it can have meaning if spent in a way that will make yourself and others around you happy. Share the wealth, even if you don’t have much of it.

10. Spend on experiences, not “stuff”

I’m pretty minimalistic, and I’ve said it before that I’d rather save money than buy some gizmo or something I won’t need in a week. But when it comes to going out with my wife, I spare no expense. I’d rather go without money in my wallet for a week and give her a nice night on the town than save and miss an opportunity we might not get tomorrow. Of course, we set limits, but you can’t put a price tag on a good time. So, even though this entire article has been about saving money, I guess I should wrap it up with: Don’t get married. Just kidding! It was the smartest thing I ever did. Save your money, so you can have a life with someone you love.

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Featured photo credit: Flickr via flickr.com

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Published on May 7, 2019

How to Invest for Retirement (The Smart and Stress-Free Way)

How to Invest for Retirement (The Smart and Stress-Free Way)

When it comes to stocks, I bet you feel like you have no idea what you’re doing.

Everyone who’s not a financial expert has been there. I’ve been there. But, time is passing and you need to be crystal clear with how you’re investing for your retirement.

Otherwise, it’s back to work until you can afford not to. So, how can you invest for retirement when you’re not a financial expert?

You take the time to learn the fundamentals well. If you do, you can grow your wealth and retire happy. The best part is that you don’t need to be a financial expert to make smart investment decisions.

Here’s how to invest for retirement the smart and stress-free way:

1. Know Clearly Why You Invest

Odds are you already know why should invest for retirement.

But, maybe you know the wrong reasons. It’s time you get clear on why you’d like to retire. Here are some questions to help you get started:

  • Will you spend more time with your family?
  • What does retirement mean to you?
  • Are you looking to launch that business you’ve been holding off for years?

Everyone wants to retire but not for the same reasons. Once you’re clear for why retirement is important for you, you’ll focus on making it happen.

Investing in the stock market allows you to take advantage of compound interest.[1] All this means is that your money earns money on top of its interest. A reason why investment in the stock market is one of the best ways to plan for retirement.

2. Figure out When to Invest

“The best time to plant a tree was 20 years ago. The second best time is now.”– Chinese Proverb

It’s true if you’d had started investing when you were 10 years old, you’d have a lot more money than you do today.

The reality is that most people don’t start investing until it’s too late. So, if you’re currently waiting for the perfect time to start an investment, it would be today. Open your calendar and block out 2 to 3 hours to choose how you’ll invest for retirement.

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A quick way to get a snapshot of where you stand is to use Personal Capital. Input all your personal information and spend some time setting your retirement goals. Once completed, you’ll know where you stand with your retirement.

Having a savings account for retirement isn’t planning for retirement. Why? Your money loses value when you factor in US inflation.[2]

3. Evaluate Your Risk Tolerance to Create the Perfect Portfolio

Investing your money well depends on your emotions.

Why?

Because when the market drops most people panic and withdraw their money. On average, the US stock market yields an annual 6% to 7% ROI (return on your investment.) But, this won’t happen if you’re worried about short-term loses.

Before you invest your next dollar, know your risk tolerance.[3] Your risk tolerance determines the number of risky and safe investments you’d have.

Regardless of your investing style, you need to view investing for retirement as a long term game. Know that some years you’ll lose money but recoup this in the long-term.

Avoid watching market-related new. Also, create a double authentication to log in your investment account. This way you’re less likely to withdraw your money.

4. Open a Reliable Retirement Account

Depending on your circumstance, you may need to open a new brokerage account. This is the account is where you’ll invest your money.

If you’re currently working for a company, odds are that they offer a 410K investing account. If so, here’s where you’ll invest most of your money. The only problem with this is that you’re limited to the stock options that are available.

You do have the option to open a separate IRA (individual retirement account.) Here are some of the best brokers:

  1. Vanguard
  2. TD Ameritrade
  3. Charles Schwab

5. Challenge Yourself to Invest Consistently

Committing to invest for retirement is hard, but continuing to do so is harder.

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Once you’ve started investment for your retirement, you run at risk from stopping. Often you’ll want to contribute less, so you’d have more money in your pocket.

That’s why it’s important that you create a budget that allows you to invest each month. If you’re working for a company, you can set a percentage for the amount you’d like to contribute each month. Most people by default contribute 1% but aim to contribute 10% to 15%.

Be the judge for how much you can afford to contribute after covering important expenses. To stay motivated, use Personal Capital to view your net worth.

A benefit to contributing money to your retirement account is not taxed. For example, if you earn $100 and invest 10%, you’d contribute $10, then get taxed on the remaining $90. As of 2019, the most you’re able to contribute towards your 401K is 19K but this can change.

6. Consider Where to Invest Your Money

The most common way to invest your money is in stocks, but it’s not the only way. Here are other ways to invest:

Robo Advisors

Robo-advisors[4] are fancy algorithms that’ll choose the best investments for you. Sites like Wealthfront make it easy for first-time investors to invest their money. You’d input information about yourself and set your risk tolerance.

Then, set your monthly contribution amount and your robo-advisor would do the rest. Robo-advisors charge a fee to manage your money, but less than regular advisors.

Bonds

Think of bonds as “IOUs” to whomever you buy them from.

Essentially, you’re lending money and charging interest. Like stocks, not all bonds are equal. Some will be riskier than others depending on their rating.

Here are the different types of bond categories:[5]

  1. Treasury bonds
  2. Government bonds
  3. Corporate bonds
  4. Foreign bonds
  5. Mortgage-backed bonds
  6. Municipal bonds

Mutual Funds

Picture a group of people dumping all their money in a jar that’s managed by a professional. This is how mutual funds work. The fund manager manages the money looking to earn capital gains (interest.)

One of the best types of mutual funds is index funds. Since these funds don’t try to beat the market and instead follow it, they need less research. Because of this they often charge the lowest fees and yield the best long-term results.

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Real Estate

Yes, buying a home is an investment when done correctly.

Imagine buying a home and using it as a rental property. After repairing it, you receive a monthly surplus check of $100 to $200.

This may not sound like a lot, but repeat this process enough times and you’d earn a large amount of passive income. That’s why real estate is one of the best investments to not only retire but become wealthy.

But, it requires a lot of money to start and you should expect losing money along the way as you learn the process.

Savings Accounts

Your money can still grow in a savings account. Nowadays most online banks offer a 2% annual return. Although the average inflation is higher your money will be available when you need it.

7. Master Disincline to Dodge Short Success

Investing for retirement is a long-term strategy. That’s why you need to master delayed gratification. All this means is delaying short-term pleasure for something bigger in the future. Research shows that those who have delayed gratification are more successful.[6]

So how can you master delayed gratification?

By building your discipline.

Think back to what retirement means to you. A clear purpose will help you avoid withdrawing your money during a market downturn. It’ll help you contribute more towards retirement when you’d want to waste it instead.

Your journey towards retirement will be long, so reward yourself along the way. Choose a reward that’s relevant and meaningful, so that you reinforce positive behavior. For example, after contributing more towards retirement, treat yourself to dinner.

8. Aggressively Invest on This One Investment

I’ve mentioned several types of investments but haven’t covered the most important one.

It sounds cliche but here’s why you’re your best investment towards retirement. The more you know, the more money you’ll be able to make. The more good habits you adopt, the more secure your retirement will be.

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More importantly, investing in yourself is an investment that no one can take away. There’s no market downturn nor tragic circumstance that’ll wipe your knowledge and experience.

But, how can you invest yourself?

Reading books, blogs, and anything that’ll help you learn new topics daily. Listen to podcasts and audiobooks on your commute to/from work.

Save money to buy courses and hire coaches. I used to believe hiring coaches was a waste of money when I could learn the subject alone.

But, coaches see your blind spots and hold you accountable. Hiring the right coach will help you achieve your goals faster than you would’ve alone.

Retire Happy with Excess Money

The key to a secure financial future doesn’t only belong to financial experts.

It’s possible for you and I. What if you were able to retire earlier than most people and weren’t a financial planner? What if you were able to focus on what you enjoy doing the most while your money was working hard for you?

I know this sounds impossible now, but the truth is you’re capable of taking charge of your retirement. I’m not a financial expert but I’ve learned how to invest my money by reading books and learning from others.

Investing your money is scary. So start small and invest a small amount of your money with a robo-advisor. Feel your money drop and rise for a month or two. Then, invest more and keep this up until you’re aggressively saving for retirement.

One day, you’ll wake up with a net worth you’re proud of – confident about your retirement. You now know a few strategies you can use to invest in your retirement. Will you take action to retire happy?

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Featured photo credit: Matthew Bennett via unsplash.com

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