Impulse shopping is a common habit, but it can also be extremely detrimental to your finances. The thing is, this is a habit many people develop once they become adults and start earning money of their own.
In a recent survey, 46% of Gen Zers said they developed the poor habit of impulse shopping in their young adult years. While a splurge here and there isn’t necessarily going to hurt your financial situation as a whole, excessive impulse buying can make it much harder to build financial stability — much less generate true wealth.
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Here are the top impulse purchases you shouldn’t make if you want to become rich, according to financial experts Sherman Standberry and Jennifer P. Kirby.
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It’s one thing to buy a car you need. It’s entirely another to go with the most expensive option just because of how it looks or what other people are doing.
“While it can be tempting to have a luxurious car, it is also one of the largest depreciating investments you can make: this means that its price can drop quickly,” said Sherman Standberry, licensed CPA and managing partner at My CPA Coach. “It loses value right after leaving the showroom and continues to lose it every year.”
This doesn’t mean Gen Zers should skip the car altogether — though they could save tens of thousands of dollars every year by doing so. The important thing is to be smart about the purchase.
“Instead of splashing out on an expensive car, consider buying a dependable secondhand one or using public transport,” Standberry said. “Luxury cars may give an appearance of wealth, but they won’t help you actually become rich.”
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Online shopping has become extremely prevalent in modern society, but it has its share of downsides — particularly when it comes to spending and saving money.
“I think a big culprit of impulse purchasing with Gen Z is like other generations — buying online,” said Jennifer P. Kirby, a fiduciary financial advisor and managing partner at Talisman Wealth Advisors. “It’s a click of a button instead of a visit to a mall. And this age group is young, and therefore more impulsive in general, which just makes matters worse. Long-term consequences are not really a concern yet, and ‘live for the moment’ is the vibe.”
With influencers on social media and endless ads, it’s easy to get drawn into the latest fashion trends. But it’s also easy to lose the hard-earned money that could have been going toward things that can actually build wealth.
“Similarly to luxury cars, designer clothing and accessories tend to be extremely expensive and devalue very fast. Moreover, trends are changing every now and then, making it hard to keep up with the latest designs without spending money all the time,” Standberry said. “Go for good-quality basics that will serve you longer and keep your cash for investments or experiences.”
Technology is another big one, as a lot of people — not just Gen Zers — tend to buy the newest gadgets as they come out. This is true of phones, computers, earbuds and the like.
“When it comes to gadgets and technology, we’re all guilty of wanting the latest and greatest. But buying new devices constantly is not only expensive, but also wasteful,” Standberry said. “Instead of always seeking out what’s new, focus on what works. Find quality products that’ll last longer than a year and don’t break the bank with brand names.”
Services that provide convenience in your life, such as ride-share and delivery services, are also expensive. Rely on them too much, and you’re bound to lose money that could have been better spent on long-term wealth building.
“I see a lot of spending in areas such convenience food apps like DoorDash or Grubhub,” Kirby said. “It’s easy to spend a ridiculous amount when ordering even less expensive fast food when factoring in delivery charges and tips.”
Credit cards, BNPL (buy now, pay later) plans, cash advances and other types of credit make it really easy to purchase whatever you want when you want it. But these options come with strings attached — namely, potentially expensive interest charges that can keep your money tied up for months or even years after your initial purchase.
“Nobody wants to put themselves into debt because of some random purchase they made on their credit card or loan,” Standberry said. “So, before you swipe away at everything with interest rates attached, take a second to plan things out.”
Standberry suggested creating a budget that allows you to make those purchases using your money rather than credit. “Not only will this skill serve you better in the long run but it’ll also teach you a thing or two about discipline,” he said.
“Gen Z also doesn’t blink at buying name brands. Specifically, I’ve seen a lot of interest in cross-branding, like musicians or athletes who have a line of clothing or perfume. The costs on these items are well above what a comparable lower cachet brand would fetch,” Kirby said.
Oftentimes, social media influencers will also get sponsored to promote certain products to their followers or audience. Many of these things come with a discount if you act now or sign up for a certain period of time.
But if you buy something just because your favorite influencer is talking about it rather than because you need it, you’re spending money you could have saved or invested.
Entertainment is another big impulse purchase Gen Zers make that they might want to avoid if they’re trying to become rich.
“Concert tickets can be wildly expensive — you see that in the press all the time and it’s Gen Z who are willing to dig deep for these experiences,” Kirby said.
Look into more affordable entertainment options or experiences that don’t cost hundreds or thousands of dollars. Keep the more expensive options for special occasions.
“Overall, it’s a lot of YOLO going on,” Kirby said. “It’s hard at that age to think long term. All generations can be accused of the same thing, but the costs now for the non-necessities seem more lopsided than in the past.”
So, then, what can Gen Zers do about this?
“The best tip is the old ‘pay yourself first’ adage,” Kirby said. “If Gen Z could take even a fraction of what they spend on the extras and automatically save it, this could have a tremendous impact over their lifetimes.”
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This article originally appeared on GOBankingRates.com: I’m a Financial Expert: 8 Impulse Buys Gen Z Should Avoid If They Want To Be Rich
