Online Shopping Is Tripping Up Americans’ Finances
Americans increased online shopping during the pandemic; members of the AICPA’s National CPA Financial Literacy Commission offer tips to keep it from busting budgets.
More than half (56%) of Americans surveyed on behalf of the American Institute of Certified Public Accountants (AICPA) late last year said they have increased their overall online shopping since the start of the pandemic.
The survey also found that 52% of respondents say buying things when they want, without thinking too much about the cost—an activity sometime referred to as “retail therapy”—makes them feel good. In addition, 39% say they often don’t realize the total amount they have spent on their credit or debit card until they see their monthly statement.
Gregory J. Anton, chairman of the AICPA’s National CPA Financial Literacy Commission, says online shopping can boost or bust people’s budgets, depending on how they approach it. “If you take the time to shop online strategically, you should be able to compare and save, which gives you the opportunity to allocate money toward other financial goals,” he says.
Other members of the AICPA’s National CPA Financial Literacy Commission have tips to help Americans keep their online shopping from hurting their budgets:
- Shop with a plan: “Merchants have powerful strategies to encourage you to spend. So, level the playing field by entering the retail arena with a plan of your own for what you need and can afford. Determine what you plan to purchase and how much you’ll spend before you start shopping. If you have a plan, you’ll be less likely to give into overspending,” says Neal Stern.
- Take time to run the numbers: “Before making any big purchase, remember to run all the numbers. Make sure you understand the return policy, delivery costs and any fees/taxes associated with the purchase. Take the time to compare the total purchase cost with other retailers to see if the same item is available for a better deal elsewhere. A few minutes of research can go a long way to help you save money and bring you closer to your financial goals,” says Darryl Nitta.
- Try a cooling off period: “In order to avoid making impulse purchases, it’s prudent to take a step back and assess whether it’s an actual ‘need’ or more of a ‘want.’ Try putting an unplanned purchase in your ‘cart’ online or implementing a ‘cooling off’ period where you allow a certain amount of time to elapse before clicking ‘buy.’ This will allow the initial adrenaline burst to subside and for you to make a level-headed decision,” says Michael Landsberg.
- Don’t shop out of boredom: “If you find yourself browsing through your favorite online shopping sites just to pass time or for entertainment, you are likely to spend money on superfluous things that you may not be able to afford. Instead, consider earmarking distinct hours specifically for online shopping and use only that time to shop for the specific items in your budget,” says Kim Hardy.
- Use technology wisely: “Technology can be a powerful saving tool when used to help you find the best deals. However, be aware that your personal electronics also make you a constant target for email marketing and targeted ads, which can inundate you with the feeling that you need to buy something you really don’t need,” says Tami Bolder.
The survey found four in five Americans (82%) say promotions such as free delivery or free shipping make them more likely to make an online purchase. And nearly one-quarter (24%) say they have increased purchasing from ads on social media.
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