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Mind Over Money: Is your urge to splurge destroying your bank account?

Wednesday, 11 March 2009 | Tags: , , ,

With consumer debt at an all-time high, we've learned that bad spending habits could be a result of how your brain works. We find out more about the psychology behind what makes people good and bad shoppers.

While we’re all about indulging in a little retail therapy once in a while, if you’re constantly seeking gratifcation through spending, you could be charging yourself into a deep hole of debt because of the way your brain works.

Psychologists have found that overspenders have their brains to blame, since the tendency to spend too much is typically about compensating for something else. If you’re angry, lonely, bored, depressed, or missing something from your life, it’s important to stay out of the malls and put your credit card on ice!

Overspending Personalities

There are four typical overspender personalities. If you fit one of these types, skip to the end to read our tips for overcoming your bad spending habits.

The Competitor

  • Gets coaxed over the finish line by friends and sales staff.

  • Likes to shop in a pack.

  • Gets an adrenaline rush from bargain-spotting.

The Compensator

  • An emotional shopper who hits the stores to load up on mood-boosting purchases.

  • The urge to splurge is a response to any number of emotional triggers: a fight with a friend, family member, or significant other; a bad day at work; a disagreement with a significant other; stress; depression; etc.

  • Often suffers from buyer’s remorse.

The Web Crawler

  • Shopping on the internet can also get you in big trouble.

  • All the bargain alerts and coupons retailers send by email can be irresistible to this impulse shopper.

  • It can lead to secretive shopping and addictive behaviour patterns.

The Impulsive Shopper

  • Easy prey for sales staff, this person feels completely overwhelmed with choices and lacks willpower. A dangerous combination.

Smart Shopping Tips

If you’re getting the urge to shop, stop and ask yourself these questions. Be honest with your answers. You may just need to get your mind off shopping and onto the real problem, instead of hitting the mall.

Am I shopping out of anger or spite?

Do I feel bad about myself or my life today?

Can I afford to pay for the things I buy?

Do I really need to buy more stuff?

You can also try these tricks according to your shopping personality to help you break your habits:

  • The Competitor: put things on hold. Delaying the purchase can relieve the pressure to buy. Whether you return to buy it later or not, you still share in the social experience of shopping. If you still really want the item when the hold deadline draws near, ask yourself the questions above. If you can’t afford it or don’t need it, let the deadline pass. The urge to buy will soon pass too.

  • The Compensator: As a first line of attack, direct your energy elsewhere. Go for a walk, meet up with a friend, go to the gym, or any number of non-spending activities. If you still feel the urge to splurge after some time has passed, read the questions above and ask yourself honestly if you really need to shop. Finally, if you must shop, set a budget, and a limit. For example, give yourself $20 to spend and that’s it. Spend it well, and feel better.

  • The Web Crawler: Unsubscribe from all forms of shopping-related email and text alerts. Delete your account profile on all shopping sites you frequent, including any saved credit card information. The convenience of these accounts makes fast-click purchasing so much easier, which is a disadvantage to Web Crawlers. Delete any bookmarks you may have to your favourite stores. Remove yourself from the fan pool for any store-related Facebook or Twitter streams, or YouTube, etc. It sounds like major cold turkey, and it is. But think about it as preventative measures: out of sight, out of mind. You’ll be surprised how much these measures help you stop overspending.

  • The Impulsive Shopper: Avoid going anywhere near stores if you feel your willpower is weak, including when you’re tired, hungry, stressed, or upset.

General Smart Shopping Tips for Everyone

  • Try to always pay cash (including using your debit card, if you don’t incur any usage fees). Paying with a credit card can cost up to 112% more in the long run than if you paid with cash. 

  • Put things on hold. If you’re undecided on something, don’t buy it thinking you’ll take it back once you make your final decision. Doing so may allow it to sit in your closet, forgotten, until it’s too late.

  • Make a list, no matter what you’re shopping for. Don’t buy too many items, especially if they’re not on your list, because it will be difficult to assess whether you really need it.

  • Be wary of sales. Just because it’s on sale, doesn’t mean you’re getting a deal, unless you’re already familiar with the item and know the quality you’re getting.

  • Establish a budget for every shopping trip, and stay within it. Better yet, establish a seasonal, monthly, quarterly or seasonal budget for everything you can, including clothing, meals & entertainment, and other typical expenses.

 

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