Spending money can be an emotional decision, as much as a financial one.
We all know that buzz you get when you allow yourself to splash a bit of cash and you walk out of a shop with a shiny new purchase. But we’re probably just as familiar with the guilty feeling of spending too much money, again, on things we don’t really need. This not only causes a dent in our bank balance, it can also stop us reaching our savings goals and being able to afford the things we really want in life.
These more negative feelings are more likely to be associated with impulse buying, rather than careful, considered spending.
A recent study estimates that up to 80% of all purchases are impulse buys. And why is the number so high? Because large retailers - whether in the shops or online - understand the psychological cues that will prompt us to buy. They design their store layout, advertising and marketing campaigns to encourage us to spend, spend, spend.
Examples include; BOGOF (buy one get one free) offers used by supermarkets, and recent innovations like ‘Black Friday’ and ‘Cyber Monday’ where certain goods are discounted ahead of the peak Christmas buying period.
The one-day-only nature of these flash sales create a sense of urgency, and encourage people to panic buy, without stopping to ask if they really need or want this product — or even to check if the discount is as good as the headline rates imply.
It’s an old adage, but buying a £100 item that’s marked down by 50% does not mean you have saved £50, it still means you’ve spent £50.
Retailers may have a well-paid army of marketing experts, but there are a number of tricks that you can use to help resist the allure of the impulse buy. Below are some handy tips to keep spending under control in the run-up to the festive season.
Stick to cash
This won’t work with online purchases, but if you are heading to the shops, particularly on Black Friday or for the January sales, pay in cash. Psychological studies have shown using debit or credit cards eases the pain of paying. Scans show that when people think about making purchases with plastic, only the parts of the brain linked to pleasure and anticipation light up. But those who imagine paying in cash have both the pleasure and pain regions stimulated, suggesting they’re also weighing up the financial costs of this transaction. It’s for this reason casinos use ‘chips’ rather than money at the gaming tables; it lulls gamblers into a false sense of security that this isn’t ‘real’ money, encouraging them to splurge. Taking cash out in advance (and leaving your cards at home) also enables you to set a budget, and be forced to stick to it.
Delay the moment of fulfilment
Try to slow down the process, and delay the purchase. This gives yourself time to ask those key questions: do I really need this item, and do I need to buy it today? Make it a rule to only wait at least 24-hours — or better still a week — before you actually buy. You can then mull over your options. If a week later you decide it’s a ‘must have’ then you’ll get a lot more pleasure from your purchase when you finally get it home. This built-in delay will also give you time to shop around on price.
Build extra barriers
Retailers make it as easy as possible for us to spend money, with ‘one click’ purchase options offered by the likes of Amazon and PayPal. Who needs to get off the sofa, find their wallet and tap in a 12-digit card number these days! Shrewd shoppers disable these convenient and all-too-easy to use options. To take it up a level, delete any saved payment details on your computer, and then tuck your wallet in an upstairs drawer before browsing online. If you really need an item, it’s not an insurmountable hardship to retrieve it, but it’s striking how even small hurdles nudge us towards being less likely to buy.
Clear out your ‘cookies’
It pays to clear out your cookies regularly. If not you’ll be bombarded with ads for items you’ve been browsing online. You may have resisted buying initially but a persistent reminder of ‘what you could have had’ every time you log onto Facebook can wear down the resolve of even the most careful shoppers. Remove this temptation from your screens.
Ignore headlines offers
A shop, or website, might have a few headline offers, particularly during sales. This can lead us to assume others goods inside are equally good value, but this is rarely the case. Shop around thoroughly before buying and you’ll be far less likely to fall for this ‘halo’ effect.
Phone a friend - or better still take them shopping
Don’t rely on shop assistants telling you that jacket looks great, or this is the new season’s must-have colour for home decor. Take a friend and get an honest opinion. (Though avoid those you know will egg you on to spend more).
This has another psychological advantage - it opens our spending decision to a degree of public scrutiny. In other words being frank with someone else about what we are spending forces us to be more honest with ourselves. You can do a similar trick by writing down all your spending and totting it up on a regular basis. Think about whether you’d be happy posting this information on social media. If this makes you feel deeply uncomfortable, then perhaps reconsider some of these purchases.
Don’t shop until you drop
Avoid hitting the shops, or browsing online when you are tired. This can reduce our ability to focus and make logical decisions. Similarly don’t plan long shopping trips, or spending hours surfing your favourite shopping sites. Research suggests we suffer from ‘decision fatigue’: in other words we have limited amounts of willpower, and if our resources become depleted we are more likely to make impulsive decisions.
We all know that supermarket shopping when we are hungry leads to more sugary snacks in the trolley; in the same ways shopping till you drop means you’ll end up spending more on things you don’t need.