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What does impulse buying actually cost you in a year?

By , who built Keep the Diff

Search this question and you will get a confident dollar figure attributed to a survey. Search again and you will get a different one, off by a factor of three. They cannot all be right, and the reason is worth understanding before you take any of them seriously.

Why the published numbers disagree

Three problems, and every one of them is fatal on its own.

  • They are self reported. People are asked to recall unplanned purchases over a month. Nobody can do this accurately. The small ones are invisible and the recalled figure is always rounder and usually lower.
  • "Impulse purchase" is undefined. Is a coffee you buy every day an impulse buy? Is a planned purchase made three weeks early? Every survey draws that line differently, which alone accounts for most of the spread.
  • The average is doing no work. The distribution here is enormously skewed. An average across people who spend nothing and people who spend thousands describes nobody, and certainly not you.

So the honest answer to the question in the title is that your number is knowable and somebody else's average is not a proxy for it.

Measuring your own, in two weeks

This works because it measures decisions as they happen instead of asking you to remember them later.

  1. Define your line in advance. Write down what counts as an impulse purchase for you. A common one: anything you would not have listed if asked that morning what you were buying today. Any line works as long as it is fixed before you start.
  2. For fourteen days, log every one at the moment it happens. Two numbers: what you were ready to spend, and what you actually spent. Log it whether or not you went through with it. This is the step that makes the number real, and it is the step everybody skips.
  3. Total both columns at the end. You now have two figures: what you spent on unplanned purchases, and what you nearly spent and did not.
  4. Multiply by twenty six for an annual figure, and treat it as an estimate with real error bars. Two weeks will miss a holiday and a bad month.

What to do with the two numbers

Most people expect the first number to be the interesting one. It usually is not.

The first number, what you actually spent, tends to land where you roughly expected once you see it written down. It is uncomfortable and then it stops being surprising.

The second number, what you were ready to spend and did not, is the one that changes things, and almost nobody has ever seen theirs. You already make these decisions constantly. They just leave no trace, so they have never counted for anything. Written down and totalled for a fortnight, they usually come to more than people guess, and the effect of seeing that is quite different from the effect of seeing what you spent.

One is a number that makes you feel bad and changes nothing. The other is evidence of something you are already doing well, which is a considerably better foundation for doing more of it.

A worked example

Two weeks, someone with an ordinary set of temptations:

  • Lunch out, planned nine dollars, spent nothing, ate at home. Nine.
  • A jacket, planned one hundred and twenty, closed the tab. One hundred and twenty.
  • A second round, planned fourteen, went home. Fourteen.
  • Takeaway on a bad evening, planned thirty, spent thirty. No difference this time.
  • Running shoes, planned one hundred and forty, bought a sixty dollar pair instead. Eighty.

The differences total two hundred and twenty three dollars in a fortnight, from five decisions. Annualized, roughly five thousand eight hundred dollars, with the caveat above that a fortnight is a small sample.

Note the fourth line. The takeaway was bought and nothing happened: no penalty, no streak broken, just no difference recorded that time. And note the fifth, where spending less rather than nothing still produced eighty dollars. A method that only counts perfect abstinence would score both of those as failures and lose one hundred and ten dollars of real signal.

Keeping it going past two weeks

The measurement and the method turn out to be the same activity, which is convenient. If you keep logging after the fortnight, the total keeps adding up, and you can point it at something you are saving for.

That is what Keep the Diff does: you log what you were ready to spend and what you actually spent, and it adds the differences up by week, by month and toward a goal. It never connects to your bank, there is no account, and nothing you log leaves your device. You can try it in your browser, use the printable tracker if you would rather do the fortnight on paper, or work a goal backwards with the savings goal calculator.

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