Are you an impulsive shopper?
If you see your favorite store is having a sale, can you resist buying things you don't need?
Or if you do need something, can you resist buying it if you don't have the money?
If you have struggled with overspending your entire life, that doesn’t mean you are not bonded to this identity. And it won't take Jedi mind tricks to become a more disciplined spender either.
Consider the following before reaching for your wallet the next time a sale beckons you.
What is the opportunity cost?
Next time you head towards the checkout, consider this question:
If I buy this, what can’t I buy instead?
An interesting study conducted by economists at Yale university highlighted just how differently people chose to spend their money when they considered an alternative way to use it.
In the study, participants were asked if they would be interested in buying an entertaining DVD. Half of the participants were given the choice of buying it or not. While the second half were given the choice of buying it ‒ or saving the money for other purchases.
Simply reminding the second half of participants that skipping this purchase would free up money for other things dropped their willingness to buy the DVD from 75% to 55%.
This effect is even more dramatic when considering more expensive items, like when you’re debating purchasing a fully-loaded car or the base model. Instead of looking at all the bells and whistles of the high-end model, consider the difference in cash you could pocket if you purchased the base model.
If it’s a difference of $5,000, ask yourself what else you could use that money for instead. Would you rather use it on a family vacation to the Caribbean? Or pay first year’s tuition for your child?
Simply being reminded of an alternative way to spend the money can more than double the chance that you will pass on the more expensive purchase.
Even when an alternative way of using your money is hinted at, this way of thinking can be sufficient enough to help you make more thoughtful purchases.
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Remember the two day rule
Picture this: you’re getting off work on a Friday night and feeling good. You’re going out for a friend’s birthday and decide to stop at the mall on your way home to pick up a gift.
While there, you notice your favorite store is having a major sale. You go in since you actually do need a new coat and end up heading to the cash with half the store. But since it was on sale, you basically got it for free, which is a pretty good deal, right?
Sorry, but you’re not fooling anyone. You’re not the winner, the store is.
I get it, the endorphins were flowing and the price was right. You simply couldn’t say "no." I’ve been there, so hear me out when I say this: SLOWLY BACK AWAY.
You may say you love everything. You might even try to convince yourself you need it all. And perhaps the opportunity cost question isn’t working its magic this time. It’s clear you are in no state to buy anything today.
Put everything down and come back after two days. Sleeping on it for just one day might be enough to put sense back into your brain, but if you’re a recovering shopaholic, best to add an extra day for good measure.
While giving yourself some distance from the desired item, truly consider whether you need it. If it’s a certain clothing item, check your closet to see if you already own something similar and can make do with your current wardrobe. A thorough look through your closet may also remind you that you already have enough clothing.
Additionally, take this time to calculate the opportunity cost:
- What else could you purchase or invest in with this cash in lieu of another outfit that may or may not be remembered after this season?
- And if after deciding this is something you truly need, could find this item cheaper somewhere else? Or…
- Could you wait for it to be marked down even more?
What are your triggers?
When you find yourself at the mall or browsing around online, what mood do you most often find yourself in? Are you happy, sad, bored?
Knowing what type of mood or feelings you most associate with shopping can indicate what your spending triggers are.
For instance, if you are like more than half of shoppers, you shop to make yourself feel better. Retail therapy is a real thing with the hit of dopamine you receive when you find the "perfect" fill-in-the-blank-here.
However, this high is quickly followed by guilt, remorse or stress due to increased debt.
So, any form of retail therapy is negated by the hit of cortisol, the stress hormone, that the shopping induced.
Next time you find yourself needing a hit of dopamine, avoid the malls and stay away from online shopping.
Instead, hit the gym, meet a friend or watch a feel-good movie.
More shopping = more confidence?
Personally, I find myself shopping when I’m excited about an upcoming event or wanting to celebrate an occasion. So I was fascinated to discover what psychologists said about people shopping during two of life’s biggest events: getting married and having a baby.
The increasing amount of purchases during these events is a way some people prepare for their new roles as it makes them feel more in control and less anxious about the transition.
There may be a connection between a parent’s feelings of confidence and the amount of shopping they do.
In reality, most seasoned parents know that no amount of gadgets will ever make you a fully confident parent. Confidence comes from experience, not from material goods.
Perhaps this is why parents seem to relax with their subsequent children. I personally found myself needing fewer gadgets and baby items for my second child ‒ we were happy to make do with less.
Train your brain
The more awareness you have about your shopping triggers, the better equipped you will be to stop mindless spending.
Our minds are so malleable and can therefore be re-trained. Once you know what your triggers are, you can replace your old habits with new ones. Getting familiar with the feelings associated with your triggers may also help with increased emotional well-being.
In the past, you may have ignored your feelings altogether and just dealt with it by shopping. But having a newfound awareness of your triggers and getting comfortable addressing them will not only help your financial health, but your mental health as well.
Keep in mind that spending money is not always a bad thing, but consuming mindlessly will lead you into debt and a house full of things you regret.
Shopping with intention and a clear mind can only lead to smarter spending.
What else can you do?
There are plenty of ways you can help curb your spending.
So tell us: how do you keep your spending habits in check?