myFICO Shows How to Avoid Overspending Online

As we’ve been staying at home more due to COVID-19, many of us have ended up spending more time scrolling on our phones or aimlessly browsing the internet. And with that comes the many online shopping temptations, like going on a mini-shopping spree on your phone at 2 in the morning or perhaps getting enticed by an Instagram ad and clicking the “buy” button. 

“When the pandemic first started and we were under stay-at-home guidance, many people turned to online shopping, and it was really easy to put items in your online cart and wait for packages to arrive,” says Brandy Baxter, an accredited financial counselor and founder of Living Abundantly.

According to the non-profit Money and Mental Health, one in eight adults spends more than they can reasonably afford to when shopping online.

That, coupled with the cashless effect, which is the fact that we’re more likely to spend more with a credit card over cash, makes us prone to overspending. Here are some ways you can avoid going overboard when shopping online:

Don’t online shop when in a bad mood

Research indicates that being in a bad mood can reduce cognitive ability or increase impulsiveness and make it hard to control spending.

If you’re exhausted, bored, depressed, anxious, or struggling with mental health, get off your phone or computer and avoid browsing your favorite online stores or scrolling through retailer Instagram accounts.

Instead, consider engaging in the world around you by going for a walk, reading a book, or playing with your pets. These things could boost your mood and prevent you from spending unnecessarily. 

Create barriers to make it hard to shop

The idea of removing “friction” in the retail world has to do with making it super easy to make a purchase. That’s why we might tend to purchase something when all our payment information is already loaded up on our phone, and it only takes a few steps to make the purchase.

To hold off on an impulse buy, create friction. That way, you won’t be as inclined to go hog wild and load up your shopping cart, only to later realize you didn’t really need—or want—half the items. Here are some methods to create friction:

Give yourself time. Give yourself at least a day to “cool” off and think through a purchase. It’s helpful to go through a list of questions:

Do I need this?

Can this wait?

Are there less expensive alternatives?

Do I already own something similar? How often do I use it?

What would I be giving up by making this purchase?

Clear your browser history. Baxter suggests clearing your browser history and logging out of your accounts on online marketplaces and places you typically like shopping at online. That’s one extra step you’ll have to take to make a purchase.

Use online favorite lists. Another tactic? Use the “favorites” features that most online shopping sites have. “You can ‘browse’ online, then add it to your list of favorites,” says Baxter. “Then leave it there on the list for a few days. If you really need it, you’ll return to it.” 

Delete digital wallets from your phone. Hard as it might be, you can also create friction by deleting PayPal, Shopify, or Google Pay on your phone, which makes it all too easy to buy something online.

Create a shopping list

Like shopping in person, have a “want to buy” list in tow when perusing online to avoid overspending, says Baxter. This can help you stay on course. Before you make your purchase, check what the final amount will be. 

This is the beauty and advantage of online shopping over shopping in a store: it’s easier to see how much you’ll be spending before you make a purchase. Otherwise, you’ll need to whip out the calculator on your phone or do mental calculations while waiting at the checkout line.  

Allocate some money to your “splurge fund” 

While you could go on a spending fast to help you spend less, you could also set up a fund for those moments when impulsivity overwhelms you.

Being in denial or believing you won’t spend another dime while online shopping could potentially lead you to lapse and go on a spending binge. Consider creating a fund for splurges. That way, your savings goals and money set aside for basic living expenses will be protected.

To create such a fund, put a little bit of money aside whenever you get some “extra” money—think a workplace bonus, a tax refund, or a cash gift for your birthday. Remember, it doesn’t have to be a huge sum. It’s just enough to cover the occasional splurge.

Avoid payment plans 

Those installment plans or “buy now, pay later” options are certainly tempting. But it could easily steer your finances off course and have them take a nosedive. What’s more, miss a payment, and it could ding your credit score.  Instead, only spend what you can reasonably afford. If it’s helpful, allocate a certain amount for non-essential credit card expenses, and stick to it.

Set limits

You might be prone to spend too much online if you can’t sleep and are on your phone. And just like how you shouldn’t be doom-scrolling at all hours of the night, it’s probably best not to shop online when you’re not very cogent.

Instead, limit yourself to shop online during a specific time of the day. For instance, after you’ve had dinner and taken your dogs out for their evening walk, or maybe during the day on the weekend.

Along those same lines, set spending limits. You can do this by way of card controls on your credit or debit card. Only allow yourself to spend X amount from certain retailers and get alerts should you spend over a designated amount. 

Shopping unnecessarily or when you can’t afford to can put you in a financial bind. To avoid overspending online, it takes a dash of discipline, self-awareness, and creating barriers that make it harder to spend and easier to save. 

myFICO makes it easy to understand your credit with FICO Scores, credit reports and alerts from all 3 bureaus. It’s a service you pay for monthly, but it’s much more comprehensive and tends to be timelier and more accurate than the many “free credit score” services available.

Find out more at https://www.myfico.com.

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