Impulsive vs. Deliberate Spending
Understanding the difference between impulsive and deliberate spending could help your company avoid unnecessary costs and keep them to an absolute minimum. Impulsive spending is more likely to occur if you don't have a set financial plan in place. Purchasing items for something that hasn’t been accounted for is categorized as impulsive spending.
For businesses just getting started or even ones that have been established for a while, impulsive spending can be detrimental for its success. If businesses go over their budget, that could mean they miss out on other places where they might need to pay for more. If too much money is spent and can’t be accounted for, then employees can’t enjoy the refreshments that are given and would have to make that money back up.
To prevent impulsive spending, businesses need to have a budget and a plan for spending ahead of time. This will help you keep your finances in order and will enable you to track cash flow. To be safe, put aside some petty cash to cover expenses. This should be worked into your monthly budget to help with small fortunes that couldn’t have been put in with your existing budget.
Deliberate spending is when you do have a financial plan in place and usually in advance. When you do spend, the money can be absorbed and accounted for ahead of time. Deliberate spending can also be known as planned purchases. These purchases can help out any company tremendously, even if you are just starting out. Helps avoid deficit spending and enables you to save money where possible.
By: Colton Smith, Onboarding Coordinator at CROFT & FROST