If you’re like me; you’ve never met an avocado toast you didn’t like or said no to a cup o’Joe, good news! Impulsive spending money on avocado toast or lattes says nothing about your discipline or your willpower. It’s just the way we are wired. But hold on, we still have to budget and save for our retirements.

So how do we bridge this gap?

The trick is to have a system that allows you to appease your impulsive self while taking care of your future self. The article outlines my 3 money hacks for impulsive people.

Future Me vs Present Me

Splurging on little things adds up. This is called the Latte Factor. We all know about it. This is how our $5 lattes habit ends up with us not retiring until 75. Well, there is a kernel of truth in that. Everyone picks on the Latte Factor or Avocado Toasts. But let’s face it, that’s not really what’s holding us back.

So why is it so hard to save for retirement even when we know we “should” and it’s for our own “good”?

Well, did you know that in MRIs, studies have discovered that when we think of our futures selves, the brain images looks the same as if we were thinking of complete strangers? It’s this disconnect that makes buying lattes now more relevant than saving for retirement. Sure, you might pay it forward at a coffee shop once in a while, but let’s face it, most of the time, you’re gonna buy that coffee for yourself.

A Latte’ Little Treats

The Latte Factor is not any one thing. Actually this: every day, you pop into Starbucks on your way into the office to grab a coffee and maybe a croissant. Then you are buried in emails, phone calls, and meetings all morning. Before you know it, it’s 12:45 and you are starving and you grab a bite at the food court with a coworker. Or maybe you worked through lunch so you grab an ice cream bar from the vendor at 2.30, y’know, a little pick me up to get you through the rest of the afternoon.

After work on a Thursday, your colleagues are going to grab a drink before the commuter train. It’s been a hectic week and you could blow off some steam. So you join them. You bitch about the recent project or the pointless meetings that could have been an email over a happy hour cocktail or two. You throw down $20 for drinks and hop on the train home.

I think I’ve described a lot of professional’s weeks here. There’s been nothing outrageous; women are not buying Gucci bags or Prada shoes every week. But we can see that there are a lot of little impulsive purchases. Coffee & croissants, lunches and drinks all add up at the end of the week.

Conventional budgets tell us to make our coffees at home and put it in a travel mug before we head out the door. Or they advise us to invite friends over for drinks instead of going to the pub. We should meal prep and bring our lunches. Keep snacks in a drawer at work to combat the mid-afternoon snack attacks.

All good advice and I do follow them. However, over months and months, it might start being a bit of a drag, always having to say no to coffees, lunches, and drinks. This is especially true if you work in a city where everyone commutes to the downtown core for work. I’ve tried arranging dinner or drinks at my place and is a feat of logistics engineering to coordinate everything.

Rotational splurging

So I put myself on a rotation. One week, I buy coffee. Another week, I indulge in a mid-afternoon ice cream or lunch out. Yet another week, I might join co-workers for a drink. The only caveat is that I don’t do all of these in the same time period. Because my weeks pass by so quickly, by spreading these treats out, I don’t feel like I’ve deprived myself at all. I feel like I got to enjoy all the social activities and I got to treat myself too. Best yet, my bank balance is still very healthy by the time end of the month rolls around.

Pre-purchased Gift cards:

Money Hacks for Impulsive people

I admit I’m a huge Sephora addict. I love buying pretty things and I set aside money in my budget for treats like a new lipstick or perfume. With any budget, there is a chance of overspending due to our impulsiveness. It happens, you go to the store with a girlfriend for her to pick up something. You are only there to “look”, but something catches your eye. Now, you are faced with “treat yo’self” or “saving for retirement” moment. Classic Present-Me vs Future Me dilemma. Here, it is especially hard to fight temptation and think of how our stranger future-self could enjoy the extra cash. Instead of waiting 72 hours to see if I still want the lipstick, serum or whatever, I whip out my pre-purchased Sephora gift card.

I get to be impulsive and I get to treat myself and I get to stay on budget. Win-win-win, if you ask me.

Your impulse buys might not be in makeup or skincare but at your favourite restaurant/cafe. Or it might be buying books because you don’t want to wait for the book to be available at the library. If it is a retail front, often, they will have a gift card option.

I set up my zero-based budget to effortlessly to stash cash away during the year. If I’m lucky, I can even find deals on these gift cards on eBay or Kijiji since a lot of people sell their gift cards on a discount after the holidays.

Tip Jars

Money hacks for Impulsive People

I live in Canada. If you don’t already know, we have a lot of change. So I picked a coin that I would always keep and not spend. I picked the $2 coin since that is the largest denomination coin. If you are reading this in the USA, you could try it with $5 bills, like this woman who saved $40,000!

So every time I buy a snack from the vendor at work or buy anything in fact, I’m scheming on how to get a $2 coin back. I never buy something just to make change, but I will put it aside every time I get one.

When I get home, I toss the $2 coins into a glass jar (my tip jar). Once in a while, I’ll roll them up and take them to the bank. Each roll of $2 is $50. I make the trip 2 to 3 times a year and I end up saving around $200-300. I’ll be the first to admit it, it’s not much. It’s not going to solve my retirement issue. But this is money that I squeezed out of my budget so now it’s not allotted to anything in particular.

I get to spend this money on whatever it is I want. It doesn’t matter if it’s new books, new art supplies, or some other luxury thing that I don’t really “need”. There are no rules for spending this amount and it’s completely guilt-free. Examples of what I’ve spent this money on in the past: set of vintage brackets for a shelving unit (definitely not a “need”), or I’ve hired a cleaner for a day (luxurious!).

Treat Yo’self

I advocate for budgeting for creature comforts and impulsive splurges because they keep us motivated in our savings goals. It reduces resentment of our budget and balances our present needs with our future selves. From a personality perspective, I have a need for novelty and impulsiveness to keep my creative fire lit.

Our society seems to perpetuate a certain image – that being frugal and responsible means depriving yourself. If you are impulsive and enjoy splurges, you are irresponsible with money. That image also portrays a budget as the stick to discipline our spendthrift selves.

But money is indeed a tool. It’s hard to save because it is hard to really feel for your future self. Our future is an intangible “someday” whereas we feel the instant gratification immediately. Our brains are not wired to have empathy for our future selves, so we hack it to get the best of both worlds.

So try it out; take a $20 and buy a coffee gift card. Use it the next time a co-worker suggests a coffee break. Set aside $5 bills or $2 coins for a week to see how fast it adds up. Take your partner out on a date night with the savings. Find the system that works for you. Soon you’ll find yourself hitting all your savings targets for future you instead of letting the impulsive you sabotage your budget!

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Originally published at sundaybrunchcafe.com