According to the Money Advice Service, an increasing number of Brits are adopting a ‘YOLO’ attitude to their personal finances.
Around five million unplanned purchases take place on an average day, with many people reassuring themselves it’s okay to spend money in this way because ‘You Only Live Once’.
In total, this money amounts to more than £167 million each day and it’s believed 15 million Brits have made a YOLO purchase in 2015 – a figure that’s increased by 158% since 2012.
Unsurprisingly, we’re most likely to splurge on or just after pay day, with 45% of these purchases being around this time of the month. Usually, we throw caution to the wind and splash our cash as a reward (39%) or when we need cheering up (32%) and we’re most likely to spend money impulsively on clothes, eating out, ordering takeaways, buying gadgets or booking a holiday.
I used to have a YOLO attitude to money
I wasn’t surprised by the Money Advice Service’s new statistics as I regularly see people taking such an approach to their finances. In fact, I’ve been guilty of it myself.
Although I’m pleased to say that I don’t live by this YOLO attitude any longer, there was once a time where I was incredibly frivolous with my cash. When it came to my finances, I only ever thought about the present, never the future.
Back when I was a student at university, I suddenly gained access to my life savings. Over the course of 20 years, I’d saved approximately £3,000 in total from birthdays, Christmases, numerous paper rounds, and lots of overtime at my part time job in a supermarket.
Sure enough, as soon as I gained access to the money, I began to splurge it all on nights out, takeaways and clothes. I did feel a bit guilty about it at the time, considering I’d worked hard for a considerable percentage of my savings and had been gifted the rest by relatives. I reassured myself that I’d pay the money back one day. Part of me assumed I’d get a well paid job and would have more money than I’d know what to do with, but another part of me couldn’t actually imagine that far into the future.
It was as if the future didn’t really matter. Now that I’m saving for a deposit, I really regret my YOLO attitude.
I now realise my future self will thank me for my frugality
In a way, I now prioritise my financial future more so than the present. I’ve lost interest in buying clothes, I rarely spend money on takeaways, and I resent parting with a tenner when ordering two drinks in a bar. Instead, all I care about is saving for a deposit and finding ways to enjoy life without focussing on material purchases. Of course, I have blips. I still treat myself to Cadbury’s Twirls on a regular basis and occasionally go out for a meal with my friends, but I’m much less likely to spend money on impulse buys than I was a few years ago.
I recently watched an interesting TED talk from Dan Gilbert, who asks the question: “Why do we make decisions that our future selves so often regret?” He goes on to explain that we have a fundamental misconception about the power of time, adding: “Most of us can remember who we were 10 years ago, but we find it hard to imagine who we’re going to be, and then we mistakenly think that because it’s hard to imagine, it’s not likely to happen.”
Why is impulse spending a problem?
Impulse spending may seem like a great way to live life to the full, but in fact it can lead to an increase in credit card debt, with one in four (21%) saying they mostly pay using their credit card. Some people think that spending money is the key to happiness, but in reality one in eight people regret spending money on impulse and one in six purchases are not really needed or wanted.
Andy Webb from The Money Advice Service warns: “Careless spending today can cause problems tomorrow.
“YOLO spending thrives on opportunity – so one trick is to leave your cards at home and only take the money with you that you can afford. If you don’t have it, you can’t spend it.
“You could make a point of waiting until you’ve compared prices before buying bargains in a sale. In the extra time it takes to shop around, you might realise you don’t really need it after all. If you do still want to go for it, stop to work out if you can afford the product and then you’ll hopefully have found it cheaper too.”
Here are my top 3 tips to help you avoid impulse spending:
Question every purchase
Every time I’m tempted to spend money, I ask myself whether I really need the item I’m about to buy. Obviously this doesn’t work all the time. I still waste money on chocolate on a regular basis, but it somehow manages to stop me spending money on other things. I like to close my eyes and picture myself unlocking the front door to my dream first house. It works.
Avoid temptation
Identify your spending triggers and try to avoid them at all costs. If you can’t go for a casual drink in the pub without getting carried away, hopping in a taxi and heading off for a big night out, invite your mates round for a night in. Get them to bring their own drinks and snacks and tell them to wear the scruffiest clothes they own. This may just stop you embarking on an impromptu night out.
If venturing into a clothes shop sees you wanting to try on more items than you can carry into the changing room, it may be best to avoid the high street altogether. If you desperately need a particular item of clothing such as a new pair of jeans, head straight for that section in a shop you know the anatomy of well. Make a beeline for the clothes you need and pretend you don’t have any peripheral vision. Hopefully this should stop you getting tempted by other items. Alternatively, do your shopping online and head straight for the pages you need.
Don’t buy something just because it’s on offer
I recently wrote about the importance of being careful when it comes to voucher codes, coupons and deals. It’s easy to get carried away and buy things impulsively just because it’s on offer. We see people doing it all the time on Black Friday! Remember, coupons and voucher codes were not invented to save consumers money. They were invented to increase sales and make brands richer.
