Difference Between Deliberate and Impulsive Spending

Your printer has run out of paper.

Do you immediately order another ream because you can afford one?

Or do you review your operations expenses and plan to purchase?

Urgent needs that appear affordable to the company often lead to impulse spending. This is spending without a clear advance plan and can result in buyer’s remorse and regret. Deliberate spending comes from a comprehensive financial plan that you create in advance, prompting option consideration and better decision-making.

In business, unexpected expenses often come up, leading to impulsive spending. How can you get these under control? Check out these simple solutions.

Set Up a Petty Cash Account

Within your financial plan, work on a budget for petty cash. Set rules or boundaries to determine how these funds are to be spent on preventing abuse or misuse. These funds should only be used when necessary to cater to urgent, short-term emergencies.

Align Approval Processes

Develop processes that require additional approval that differs from the expense initiator. This includes ensuring that each request to spend has a supporting reason or document. Doing so will reduce the possibility of funds being misappropriated as more than one person is responsible.

Being deliberate about spending in your business leads to: –

1.  Tracking and accounting for all your financial resources

2. Less misuse of resources

3. Control over your business costs and ultimately savings

4. Ability to save and invest your profits rather than spending

5. Freedom to meet your financial priorities

6. Long-term business growth

For your business to thrive you need to avoid impulsive spending. A small leak will sink a big ship. Even though it may seem like you have the money to spend in place, you must ensure that every cent you have has direction and fits within your financial plan.

I have two solutions to help you manage your spending. First, schedule an appointment with an accountant. Create weekly and monthly budgets and understand your spending for a winning strategy.

The second solution is to get your spending priorities in order with the assistance of a qualified business advisor. You can establish spending priorities, gain clarity on needs vs wants, and create a deliberate plan. With RCN CPAs, develop an actionable solution that will help you gain control of impulsive spending.