Saving money is an age-old problem that can often be attributed to ever-rising costs of living; but the problem of saving money is also one of a psychological nature in which our mind and way of thinking ultimately lead us to spend more than we really need to.
Here are five situations in which you’re more likely to spend more than necessary:
When presented with an urgency to buy
Have you ever bought two pairs of jeans because it was on a one-day-only buy-one-free-one promotion?
It’s inevitable, nobody likes to miss out on a great deal on something they want which is why, when presented with an urgency to buy, they tend to rush into their wallets – never heads first.
This urgency to buy often manifests itself as offers with a time or quantity limit, but can also sometimes be disguised as an opportunity to try something that one would never usually – at least not at retail price, pay to experience.
The solution: Put rationale and logic back in the front seat. It is rare for one source of consumer products or services to be able to claim exclusivity. If you miss out on a great deal, chances are you’ll be able to find it somewhere else or at a later time in the future.
When maintaining more than one bank account
Resolved to start a home fund? There is the option of stashing your money under your pillow or in your socks drawer, but everybody knows that isn’t the wisest move.
Enter the option of opening a new bank account, which incidentally is easy, lets you earn interest, and can be done over lunch with time to spare for dessert. With so many attractive offers to open a bank account, it’s hard to see the downside of doing so.
But according to researchers, having your income spread across a few places can result in false security. By thinking that you have money saved up in another bank account, it’s easier to justify a purchase, which in turn can lead to unnecessary spending.
The solution: Constantly remind yourself of the purpose of opening the second account – which is to save, and keep track of your spending.
When buying something presumed to be embarrassing
Unlike Westerners, Asians have a tendency to shun the topic of sex, which makes buying things that imply one’s intentions of partaking in such an act to be embarrassing.
When one perceives a particular item (think condoms) to be embarrassing, they are more likely to employ diversion tactics by purchasing something (or a bunch of things) they don’t necessarily need, thus spending more than they actually have to.
A study in the Journal of Consumer Research found that almost 80% of people spend money on unnecessary extras as a way of diverting attention.
The solution: The ideal solution is better awareness and education that can ultimately change the mindset of people perceiving certain topics (and by extension, any items that imply the subject) to be embarrassing and must be shunned. But, if it can’t be helped, supplement your “embarrassing” purchases with things that you will actually have a use for.
When retail therapy is the cure for stress
What do you get when you put together a horrendous traffic jam, an inbox bursting with unread emails, and a grumpy boss who also has to experience both things? Stress.
It is not uncommon to hear the words “retail therapy” being uttered when under the influence of stress these days and with online shopping gaining traction, shopping has become as common and frequent as eating.
Shopping in this manner often leads to impulsive purchases and items that often become permanent residents of one’s closet or being the victim of a recycling run.
The solution: To a working professional, stress is inevitable, but there are cheaper and healthier ways to manage stress. An article by Harvard Health Publications credits regular aerobic exercise with reduction in stress, anxiety, and depression.
When you are not under pressure to get things done
This is best illustrated in the context of shopping. When one recognises that time and tide waits for no one, shopping becomes a task that needs to be over and done with as quickly as possible thus cutting out any unplanned stops which can lead to overspending.
The solution: Fit your grocery shopping into a relatively busy day, such as a Saturday filled with other chores that need to be done, but allow yourself just enough time to complete everything without too much stress.