The Psychology of Spending: Why we buy things we don't need and what we can do about it
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Why do we overspend? It's a question that has perplexed me, economists, and psychologists alike for decades (though them more than me). From the lure of sales to the seductive power of social media, there are a myriad of irrational impulses that lead us to spend more money than we should. Let's take a quickexploration of some of the most common reasons why we overspend and what we can do to curb those impulses:
The Sale Trap: There's something irresistible about a sale. It's like the shopping gods have smiled down on us and blessed us with a once-in-a-lifetime deal. But the truth is, sales are often designed to lure us into buying things we don't need. That 50% off tag might seem like a great deal, but if you didn't need the item in the first place, you're still spending money you don't have. Look for sales on things that you are planning on buying anyway. Or try walking away from an item on sale that you didn’t expect to buy and see if you still want it in half an hour.
The Fear of Missing Out (FOMO): We've all experienced FOMO at some point in our lives. It's that nagging feeling that everyone else is living their best life and we're missing out on something. Social media has only amplified this feeling, making us feel like we need to keep up with the Joneses in order to be happy. But the truth is, happiness comes from within, not from material possessions. More and more we are seeing how much posturing and lies are presented on social media. Take a break from social media for a week and take a look at the things you already have: your health, your family, your friends. What are you really missing out on when scrolling through social media?
Instant Gratification: We live in an age of instant gratification. We can have food delivered to our doorstep, stream movies on demand, and shop with just a click of a button. But this convenience comes at a cost. It's easy to forget the value of hard work and delayed gratification when everything is available at our fingertips. We try to teach our kids the value of delayed gratification and are not holding ourselves to the same standards. Before checking out, ask yourself: ‘Do I really NEED this or do I just want it?’ ‘Can I afford this?’ And ‘Will I regret this purchase later?’
Keeping Up Appearances: Whether we like to admit it or not, we all care about what other people think of us. We want to look successful, put together, and stylish. But the truth is, no amount of material possessions can make up for a lack of confidence and self-esteem. Spending money on qualify is not the same thing as keeping up appearances, but don’t use that excuse to buy things to don’t need in order to make people see you in a certain way.
Emotional Spending: We've all had those days where we feel down or stressed out, and we turn to retail therapy as a way to make ourselves feel better. But the truth is, spending money won't solve our problems. It might make us feel better temporarily, but the underlying issues will still be there. Sometimes, it may even be a reason for some of the issues in your life, or exacerbate the issues you are already dealing with.
Overspending is a complex issue that is influenced by a variety of factors, from societal pressures to our own emotional states. By understanding and acknowledging these irrational impulses, we can take steps to curb our spending habits and build a healthier relationship with money.