How to Eradicate Impulse Buying Once and For All [TFC 94]

How to Eradicate Impulse Buying Once and For All [TFC 94]

 After spending the day shopping at the mall, you return home happily with your shopping bags. However, as you unload your bags, you realise you didn’t really need half the stuff you bought; they were bought on impulse. Sounds familiar? You are not alone. While you will find on the internet many solutions on how to reduce impulse buying, not many offer a solution to stop impulse buying once and for all. In Episode 94 of The Financial Coconut this week, Reggie discusses the concept of Money Story as a way to help you eradicate the root of impulse buying.

He starts this episode by defining impulse buying as purchases that are primarily triggered by emotions. Based on this definition, Reggie connects the way we spend money to an interesting concept known as Money Story, which are the ideas, beliefs and narratives that inform how we spend our money. Every purchase has a Money Story attached to it and impulse buying can happen if your Money Story is not well thought out.

Using the concept of Money Story, Reggie suggests 3 ways to make sure our Money Stories are sound: recognise our own Money Stories (especially those that are half-baked), investigate our half-baked Money Stories (why are they half-baked?) and update our Money Stories by keeping the ones we believe in and putting aside the ones that don’t make sense. By complementing our emotional state with logic, we can be free of impulse buying.

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podcast Transcript

Reggie: Hey Coconuts! Do you remember the days when there was only 11.11? Now there’s 1.1, 2.2, 3.3, 4.4. There is some sort of advertisement and some sort of sale going on every single month. Like it or not, I think many of us fall into impulse purchases. Beyond all these small little things, I do think a lot of people fall into impulse buying for financial products, stocks or property. All those things are some form of impulse purchases and I’m going to define for you slightly later but the core idea is… there are many people sharing with you ideas of how to curb your impulse purchases by managing the impulse, but they don’t really eradicate the fundamentals. So I think I have some things to share that may be pretty helpful for most of us to fundamentally eliminate impulse purchases without a lot of willpower involved. Welcome back!

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Good morning everyone. I welcome you to another day with The Financial Coconut. In our podcasts, we will be debunking financial myths, discovering best financial practices and discussing financial strategies that fit our unique life. You get it, ultimately empowering us to create a life we love while managing our finances well. Today we’re going to spend some time to focus on how can we possibly eliminate impulse purchases without the use of active willpower… I think there is a way.  

I think many people have their own experience with impulse purchases and probably have their own definition of what is an impulse purchase. A lot of people will substantiate and say, “this is not impulse purchase, I thought about it for very long.” And like it or not, there may be some basis to that and we can talk about that as we go along. But for everyone else who is trying to manage their impulse purchases, I think what is out there on the internet is a lot of very surface solutions. 

Essentially, it’s like setting card limits or having multiple bank accounts or meditating on your impulse. Like if you see these things when they’re on sale and the sale is two weeks down, you go back and think about it for a week and then you decide if it’s what you actually want. And if you actually look at all of these things, they all require willpower and they’re all just trying to manage the impulse. So it is an endless cycle. You keep coming back to this thing and every time it is challenging you, but you’re not actually solving things at the core. 

Why does this impulse exist? Is there a way to eradicate it all together? In my view, there is. Because for a very long time, I have very little impulse spending… like almost nothing. Maybe the only thing is the stock market… a bit of FOMO (Fear of Missing Out) when sometimes I see certain companies that I want. But for many other things… in fact for all other things, I realized that I no longer feel a need to buy, I don’t feel a trigger to spend. That means I don’t feel that impulse spending situation anymore. That does not mean that I don’t spend money. It’s just that when I buy things or when I spend or when I do any kind of purchases, whether is it buying things, invest and whatnot, it is generally very logical. I just feel this joy in getting it, but I do not feel that emotional roller coaster, “do I want it, actually I want it? But I don’t know!” I don’t have that kind of thing. I think that is a pretty good place to be in and for many of you that want to be here, impulse purchases is a classification of all of that! All that emotional roller coaster is what impulse spending is about. 

I’m going to take this time to define impulse spending from an objective standpoint so that we can continue our discussion. To me, impulse spending is defined as spending primarily triggered by emotions.

That means it is a very “feel” thing. Like suddenly you feel like you want to buy this thing or something triggers you emotionally and you’ll be like, “Yeah, maybe I want it.” So you feel this emotional roller coaster before deciding whether you want it. You’re going through this process. To me, generally an emotional roller coaster decision tends not to be the best. It ends up becoming something that you may not want it, or it’s just buy and chuck somewhere or something. To me, impulse buying is fundamentally triggered by emotions and we can solve that. 

My base case when I look at how people spend money or how I spend money, is that we all have these things that we call Money Story. Someone out there in the big white wall of the internet already came out with this term so I’m going to use it.

Money Stories are essentially ideas, beliefs, and narratives in our heads that inform how we spend our money. It comes from everywhere. From your family, it comes from society, it comes from media, your friends or what have you not, even at work, etc… There are all sorts of Money Stories out there and some of them will be “cheap and good”. I’m sure Singaporeans know this thing “cheap and good”! So cheap and good… but when you ask the people do they actually have a definition for what is considered cheap, is it a mean relative to everyone else? The mean of the market is below so is considered cheap? How do you define as good? What is considered good? When you ask people do they have some definition for cheap and good, or at least some frameworks to try to understand what is actually cheap and good? If they don’t, then they have a half-baked Money Story. So there is a problem here… the Money Story not complete. To me, half-baked Money Stories are the problems! It causes all these emotional kings. We can talk about that later. 

Another example of a very common money story is “I can pay a little bit more for convenience”. So… premium for convenience. It is a reality. You go to the supermarket, it is much cheaper, but people go to 7-11… near and convenient. That’s the idea! There is some sort of premium that people pay for convenience and it is a Money Story in some people’s head. But when you ask them… what is the okay premium to pay for and what is considered convenient, all of that stuff, maybe they don’t exactly have a proper idea, they don’t have a frame to it. So that is a half-baked money story. 

And today I’m not trying to critique your Money Story or trying to say what Money Story is better than the other Money Story. No. The only way to really have some objective discussion about which Money Story is more suitable is really based on your goals and your way of life. If you want to achieve a particular way of life or you want to achieve a particular goal, there are certain Money Stories that will give you an advantage towards achieving that goal. But if there is no framing about what is that goal that you want, then there is no superior Money Story. We’re not here to discuss which Money Story is better. But recognize that behind all your purchases, there is a Money Story.

Things like everybody must have a home… “you must have home, must have a shelter cover your head”. This is a Money Story! Actually if you think about it, do you really need it? What is it for? Big question mark. Based on that idea of Money Story, people have impulse spending when the Money Story is half-baked. That means they don’t exactly know what is going on. In other words, somewhere, somehow, somewhat, they have gathered all these Money Stories when they’re growing up or when they’re exploring life and they are not fully understood. There are all these little things that are around and people are just… pick it up.

Honestly, it’s very hard to process all these information everyday. Nobody sits down and think about this all the time. But if you think about it, if you have a lot of impulse purchases, that means you have a lot of information unprocessed, you have a lot of half-baked Money Stories. When we bring it back to the “cheap and good” Money Story, which a lot of people have in their head and it’s half-baked…. when you ask them what is considered cheap, they don’t have a framework for you. What is considered good? They don’t really have an idea also. But they will buy, they buy a lot of things because it’s cheap and good! Sales, a lot of sales! 

I’m sure sometimes we fall into that, or maybe last time we fall into that, or we have friends that fall into that whole cheap and good sales cycle and they keep buying all these things. When you bring it back, you sit down, ask yourself… “Actually do I need all these? There’s a sale and I buy… maybe in the future I need. If… if…” So following that thought process of half-baked Money Stories, leading to impulse purchases and to fundamentally eradicate impulse purchases, you have to fully bake your Money Stories. 

The very first point that you need to do is to recognize them. Recognize your half-baked Money Stories and you do that in the process of recognizing your emotional triggers. When you get emotional, that means there is a problem here. I think this point is pretty inevitable. If you want to solve anything, you must first recognize that it exists. But why do I put this as the first point on top of that inevitability? Like I said in the very opening, when people feel the impulse, they manage the impulse. They put all their bandwidth and all their mental capacity to try to manage this impulse. 不要花钱,不要花钱 (Chinese “Do not spend the money”) or don’t invest, don’t anyhow invest, or don’t anyhow buy. It’s very tiring and we have limited bandwidth, we have limited willpower.

I think willpower is something that have more and more discussions out there so I’m going to use the word. We have limited willpower and because of limited willpower, if you spend all your energy trying to manage that impulse, you may not have the energy to try to find out why this impulse exists. So what I want you to do, instead of putting all the energy to manage the impulse, work with it. Sit with it and ask yourself, “actually why do I really want this thing?”

Put all your energy into finding out more about this impulse, talk to it. You can talk to it, there are many ways… you can meditate on it, you can talk to it. I think journaling is one of the best. So I sit down… every time I feel this impulse, I’ll write down. I’m feeling this impulse to buy this, this, this. Why? Maybe because I think it’s an opportunity I don’t want to miss or etc.. There is no clear cut, straightforward strategy for this. But spotting the pattern is one of the very good way to go about doing this. What you can do is every time you feel that emotion, you put all your bandwidth into trying to write down. 

Very likely the first few times you may not see a pattern. But after a few times you will start to see the pattern. Now why do I feel like I need to get this thing? One is the Money Story that’s half-baked here. So do that process, keep writing it down a few times… of course during these few times, you may fail to control the empowers. You may end up buying the thing, which is also fine. Because if you buy it, you also learn in the process that maybe I don’t really want it etc.. So it’s a process. But what I’m trying to get you to do is to observe that problem, write it down and over time you get a little bit clearer what is the pattern here. You’ll try to figure out what is this problem. 

Let me share with you a story of mine. I think a lot of the impulse that I’ve worked through… I cannot really remember all of them, but the latest, the last one that I worked with was this impulse to try to buy the stocks that my good friends are talking about. The reality is a lot of my friends, they’re doing very well in the stock market and they’re doing very well financially, definitely way above me. When they talk about a particular thing, I price a premium into what they say…. interesting. I didn’t realize that until I started sitting down and ask myself why every time they say something, I feel like I FOMO, I should buy that stock. But after I buy it, I realize maybe that’s not what I want. Maybe it does not fit my palate or maybe I don’t understand this company enough to really buy it. I usually will do a process of studying before I get it. But there are these few friends that once they say it, I will discount my study and go and buy it.

This is a pattern that I’ve observed and I over time realize that it’s a summation of two stories. One is… I trust my friends that are performing very well, I trust them. I trust them to a point where I can deduct my own abilities. That means I think I’m lousier than them. So if they say… that means it must be good. This is one story. 

The other story is… for a period of time, I felt that more money is going to solve all my problems. That means I’m stuck in my life and I just need more money to get it done. So these two stories put together created this mammoth of FOMO, where I am just willing to buy a particular stock without trying to understand what’s going on. Just because a very good friend is doing very well told me that this is a good stock. So that is impulse purchase. And sometimes it’s not so easy because there are like multi stories put together. Multiple stories put together to create some of these kinds of reactions and create some sort of half-baked Money Stories out there.

Composite even more complex. And this brings me to point number two… and that is to investigate your half-baked Money Story. I’m going to talk a little bit more about this after a word from our sponsor. 

All these Money Stories they come from somewhere, whether or not they are fully baked or half-baked, they all come from somewhere. They tend to come from your family more often than not. 80% to 90% of your stories, your beliefs, your ideas, your behaviors, they do come from your family. I know there’s this whole other part about performing inverse to what your family does. That means if your family spent a lot, you take the other position, you don’t spend. That is also a way to react to how they do it because you don’t agree with their way of life. You take on the other side, you don’t spend, which is what I did for a period of time. That does not mean that I fully baked the story, it’s still half-baked. I just take the other side rather than following their way of life. But this is a story for another day. The main idea is still that these Money Stories are half-baked and that’s why you’re feeling the impulse.

What you need to do is to go and investigate and what’s the best way to investigate? Talk to your parents. Ask them, “Hey, why like that?” when people tell you to do a certain thing when it comes to money, or when it comes to any aspect of your life. But just for today, we focus on money. So they tell you must save. Standard Money Story… save. You make money, you must start saving. Have you bothered asking them why? When you ask them, “why”… you will get a much clearer idea why they tell you that. It tends to be that they will tell you this half-baked grandmother story. “Oh, you know last time, my friend…” or “You know last time we were very poor…” But it’s not very logical. It’s very emotional and it’s perfectly okay that it is emotional. I’m not discounting the experience. I’m not discounting that they’re emotional, but I’m just recognizing that they are emotional. Which means their stories are half-baked also, they don’t have logic framework to fully complete their Money Story.

If that’s the case, you will end up taking on a half-baked Money Story because that is where it comes from. When you go and investigate your source or where do all these stories come from, you also have to realize that a lot of them are half-baked and that’s why a lot of people have big impulse spending reactions.

Another very half-baked story that’s very prevalent out there is this fear of bankruptcy. A lot of people tell me, “What if later I bankrupt?”, I’m like… do you even understand what is bankruptcy? Bankruptcy is a legal protection mechanism that after you have leveraged up and take on all these loans and you fail your venture and you go crazy and wild that the bank cannot totally remove everything from you. There is a protection process, liquidation process so that you don’t get attacked in other words. Bankruptcy is actually a protection mechanism. But for many people they don’t understand what is this thing. It is just a very emotional narrative story… “because last time my neighbour, owe money pay money draw very big outside the lift.” So once again, I’m not discounting the experience, I’m not laughing at their story, I’m not discounting that whole emotional ride that they go through, but I want you to recognize that a lot of people only have emotional rides. 

They are all holding on to half-baked Money Stories. They don’t have a framework to understand what is bankruptcy, they don’t understand investments, they don’t understand risk, they don’t understand how to make decisions, they don’t have their own metrics. Everything is “feel-feel”, and all based on stories. I’m not even saying that you must have logic in everything, but if you want to fundamentally eradicate impulse spending which is the topic for today, then you have to add logic frameworks to fully bake all these stories. That is the base idea. 

So go and investigate all these half-baked Money Stories. Go and ask your friends, ask your family, ask your partner, ask your boss, ask your HR manager, “Why do we need to do this?” Why is save, save, save? Why do we need to invest for the future? Why, why, why… Ask them all these things. We’re not trying to judge whether the story is good or not, because like I said, there’s no objective, there’s no better strategy. But what you’re really trying to do is to do one thing only: to try to recognize is there actually a logic behind all these Money Stories in your head. And based on the source, if the source of all these half-baked Money Stories actually have a full baked logic behind it, you can consider adopting that logic, which is great! You now have a framework to work with. If the source is also very emotional and have half-baked Money Stories, then you really got to question, “Why do I need to do this?” 

That brings me to point number three… and that is to update the Money Stories, recognize whether it works for you. Truth is it is a process to try to go to this whole thing. You will not do it in one episode, two episodes, it does not work that way. It may take a few years to process all these backlog half-baked stories. But what you can actually do is… you can choose to forgo these half-baked stories or put them in a consideration box. That means this logic or this Money Story does not have a logic yet. I can put it one side. And that is very powerful also, because to process all these things it takes time. 

If you want to curb your impulse spending immediately, what you can really do is to first say that this is not my story, this is not what I believe in. Like hanging out with the Joneses. That is one classic half-baked Money Story out there. It’s like I don’t hang out with my friends, so when I hang out with my friends, I can spend more and all that stuff. You realize that a lot of people do that. When they hang out with their friends, they feel like the wallets can open up, can just relax and just do everything! That is a half-baked Money Story there because a lot of people they cannot tell you exactly why they do that. There’s no clear logic behind it, that’s the idea. Once you realize that these things are half-baked Money Stories, they are not complete, you can actually choose to put them in the consideration box. You can choose to put them aside first. This is actually a very powerful psychology technique. A lot of psychologists will tell their client to do that, to recognise what is theirs and what is not theirs. And what is the thing that they are not sure whether it’s theirs or not yet.

I like to adopt that kind of strategy into my own life because I think psychology is a pretty cool subject. There are a lot of strategies and a lot of things. As you understand yourself, as you understand your head, understand your mind, it actually… can use it in personal finance quite extensively. It’s very powerful. When I recognize that power, I start to see that… yeah, actually I can do that. I can recognize what are fully baked Money Stories in me. What are the half-baked Money Stories that I don’t have an answer yet and what are the half-baked stories that after I realized they are half-baked, I actually don’t want them. So I can decide what I don’t want, I can throw them aside. I can decide what is not clear yet, I put them in another box and I can embrace what I already know. 

That is the idea… that does not mean that you stop processing all these things that are half-baked. But once you can psychologically or mentally recognize this, you have some sort of mental framework in your head, then the impulse will reduce by a lot. I don’t know how to tell you exactly why the human mind works this way, but it is very powerful. Once you recognize that this these half-baked Money Stories are creating all these impulse spending and all these half-baked stories are not what I actually believe in… then you update your system. Say… this is not mine, I put it aside. Of course we can go on and on, talk about caveat strategies and all that stuff. But the base idea here for today is that we all have Money Stories in our head and all of these Money Stories inform the way we spend, informs our purchases.

Some of these Money Stories are half-baked, they have no logic behind these things. It’s just a “feel-feel” kind of thing. When there’s no logic behind all these half-baked Money Stories, it creates impulse purchases which are fundamentally driven by emotions. That is the whole idea here today and to fundamentally eradicate your impulse purchases, you have to essentially either work on the half-baked Money Stories to make it fully baked with logic framework, or you can decide that these half-baked Money Stories are not my Money Stories, I put them aside. Then you realize that maybe I don’t really fall into this impulse trap anymore and that is my experience. I want you to go and try it, let me know if it works. That will be amazing if it works for more than just myself. Following that logic, I’m going to sum up today on how to eliminate impulse spending without a lot of willpower.

Number one is to recognize your Money Stories and you do that through recognizing your emotional triggers. When you feel emotional, it tends to be that there is a half-baked Money Story here. Recognize what is fully baked with logic, what is half-baked.

Number two is investigate all these half-baked Money Stories. Go and talk to the source and the source tends to be your parents. About 80% to 90% of your Money Stories come from your parents. So ask them “Why like that, why like that, why like that?” A lot of media participation also. Go and check it out and try to find out all these half-baked stories that exist, investigate the source. If they have the answer… hey! You gather some sort of logic framework for it. If they don’t have an answer, you recognize that even they are taking out half-baked Money Stories. 

Number three is then decide whether or not these half-baked stories are for you. If they’re not, put them aside. If you think that there’s something here, work on a logic framework for it. Ultimately when you can attach logic framework and fully bake all these Money Stories, then you realize that you no longer are being trapped by impulse spending. Yes, I hope you learnt something useful today. See ya.

Hey! I hope you learnt something useful today and truly appreciate that you took time off to better your life with The Financial Coconut. Knowledge is that much more powerful and interesting when shared, debated and discussed. Join our community Telegram group, follow us on our socials and sign up for our weekly newsletter. Everything is in the description below. Be a member today also to get premium investment content. And if you love us and want to help us grow, definitely share the podcast with your friends and on your socials. Also, if you have any other interesting thoughts to share or know someone that you want to hear more from, reach out to us through With that, have a great day and stay tuned next week and always remember; personal finance can be chill, clear and sustainable for all.

I hope today’s episode was an interesting one for you. I do think impulse spending is a very big problem, clearly if not I won’t do an episode and these are the ways I do it. I want to really urge you to try this, let me know if it works for you! If it works, we may be on to something guys! I may be speaking on TED Talk! Recently, some of you guys have been asking me to review some financial products or some structured financial products out there, whether is it from this bank, that financial company and all that stuff. And I’ve been trying to look at them and try to understand how to create a framework to evaluate them.

Next week, I will share with you some main things that you should look out for when looking at them, which are actually not very different from what I’ve been sharing, but just in a structured manner. Because there are a lot of points that I share across the podcasts, here a little bit, there a little bit, there a little bit… I’m going to put them all together to help you have some sort of mental framework, some sort of process to evaluate all these structured financial products. If you so choose to put your money in these kind of products which are commonly known as unit trust, mutual funds or all sorts of whatever portfolio out there. Which is usually sold by the banks or your financial agents and what have you not. That is for next week. Thanks for asking, keep the questions coming, join our Telegram group. If you have any good questions, I will pick it up and make it into an episode, so just keep the questions coming you never know what will hit. 

Later this week, we will hear about ESG (Environmental, Social and Governance) investing with Samuel from Endowus, so that’s going to be fun. I think ESG is becoming more and more of a thing especially with millennials. Happy to have him on and we’re going to talk more about it and I will be transiting out of Chills with TFC. We have a great host, Andrew that joined us and he will take over the Thursday Chills eventually. I do have some content recorded, we’re going to finish. releasing all that content and you’re going to start to hear Andrew hosting the Chills with TFC sessions. I will do one episode with him to officially transit and share with you guys my thoughts about transiting and all that stuff, all the good stuff. 

Thanks for supporting the podcast. You guys are keeping us strong and a lot of people love us and I thank you for loving us. Take care, bye!

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