It’s a time of year when many of us break the budget and spend too much money. If you’ve planned for this, a bit of indulgence won’t hurt, but if you ever have a sick feeling in your stomach about how much you’ve spent, read on.

It is estimated that 40-80% of purchases are made on impulse. This is because most of us spend most of our time in a relatively unconscious state, acting on automatic pilot, rather than being fully conscious and mindful.

The psychology of selling

Shopping malls are set up to induce a state of zombiefied mindlessness, with piped music and no clocks, and, of course, retailers both online and bricks and mortar are well aware of how to use psychology to get us to buy ‘unconsciously’.

Black Friday gives us lots of examples of this. Retailers create a sense of scarcity by offering the ‘bargain’ for a limited time only, which triggers our chimp minds to slightly panic, and want to buy immediately, even though the evidence is that prices are not particularly better on Black Friday at all. By giving us (an often inflated) original price, they are causing us to ‘anchor’ at that price, so that the reduction makes it seem as if we simply can’t miss this opportunity, even if we end up spending too much money.

Creating hype around Black Friday also enables retailers to speak to our herd mentality, where we do something because everyone else is doing it. Kids bunk off school, or, in our area, get given the day off school (ostensibly for teacher training), adults stay up until midnight or wake up at the crack of dawn to get the best bargains.

Mind tricks

But we can’t blame it all on the retailers’ psychological tricks, as we are also pretty good at doing it to ourselves. One of the key factors in overspending is present bias. We all have a tendency to prefer immediate satisfaction to future benefits. We may know at some level that we want to save up for an important purchase, but if we are not careful, we’ll conveniently ‘forget’ when on a spending spree.

We may also spend too much money when we use cards rather than cash, as the brain doesn’t seem to register the reality of the purchase in the same way. For this reason, if you’re trying to stick to a budget, a good tip is to take out the week’s money in cash and spend that instead.

And, finally, we often find ourselves throwing caution to the wind, and adopting a ‘may as well’ mindset. ‘I’ve already overspent so I may as well buy this too.’ It seems that this mindset particularly applies to over-eating and overspending. Think how ridiculous it would be if we went around saying things like, ‘I’ve just spilt ketchup on my t-shirt, I may as well pour the whole bottle over it now.’

Mindful spending

When we really examine what is going on when we’re over-spending, it’s very clear that the chimp mind is in charge. Just imagine that chimp running around throwing currency notes in the air. The answer, as with most things, is to get more mindful. Make a shopping list when you’re in your right mind before the chimp gets going, plan a budget, and consciously notice both the retailers’ ploys and your subconscious reactions as you’re shopping. And remember, that despite what advertising tells us, buying things doesn’t actually make you lastingly happy.  

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