After months of being unable to splurge on things like a vacation or even a night at the movies, experts say many Americans have hit a point of “frugal fatigue.” In fact, a new report by Comscore Inc. shows impulse spending is at the highest ever.
With store closures and in-person shopping concerns, many consumers have moved more of their spending online. On average, they’re now spending roughly 25% of their discretionary income there.
“When people are cooped up at home, there’s the tendency for impulse buying,” said Greg McBride, the Chief Financial Analyst at Bankrate.com.
“I think the pandemic has moved us forward seven years in the last seven months, in terms of certain trends particularly towards digital,” he added.
While online shopping has been around for a long time, McBride explained that in the last seven months, more retailers have gone online. Those already there have invested significantly in making their shopping experience easier and more convenient, so that people could spend more and more often.
An easier online shopping experience eliminates the "old buffer" of someone getting in their car, driving and browsing around their favorite stores. The old way provided time to reconsider a purchase or how much to spend.
“The tendency for emotional or impulsive purchasing can be really devastating towards your financial goals and unwind a lot of progress you may have otherwise already made,” McBride added.
A little impulse spending won’t hurt, but these numbers are concerning some experts like McBride.
“It’s really important to identify what is your trigger? Is it sadness, is it boredom, is it 'Keeping up with the Jones?’” he said. “Then developing strategies that can distract you from that.”
Two simple strategies he suggests are, first, do not show up without a list or only shop for specific item. This goes for in-store shopping and, especially, online.
Secondly, you should set a personal threshold for spending and impose a 24-hour waiting period for purchases above that threshold. It recreates a buffer and gives you time to sleep on the financial impact of bigger purchases. That impact could be more significant during this pandemic.