Mind-Body Health

The Psychology of Spending and How to Avoid Pressure to Spend

The Psychology of Spending and How to Avoid Pressure to Spend
Many of us would agree we enjoy spending money on things that bring us pleasure. From dinners at a nice restaurant to luxurious vacations, there’s no shortage of material items and activities we derive enjoyment from. Although our individual preferences may differ as well as the amount of money in our bank account, the reasoning behind our spending remains relatively similar. There’s nothing wrong with spending money—but problems can arise when we spend money we don’t have or overspend excessively.

The holidays can be a challenge in terms of spending. We feel pressure to buy gifts for our loved ones while simultaneously being bombarded by advertisements encouraging us to treat ourselves. By gaining an understanding of why we open our wallets in the first place, we can find ways to avoid the pressures of overspending, and have a less expensive and more enjoyable holiday season.

Why We Spend

A fundamental reason we enjoy spending money is that it allots us feelings of being in control. According to a study in the Journal of Consumer Psychology, consumers typically shop while feeling sad, an emotion strongly linked to feelings of lack of control. Researchers found that making purchases—also known as retail therapy—not only reduced feelings of sadness but also restored a sense of personal control.

In the study, shoppers who opted not to make a purchase, essentially making a passive choice, did not experience a reduction in feelings of sadness or anger. The reduction of sadness in shoppers was associated solely by increased feelings of control. Evidence did not support other explanations as to why shoppers experienced less sadness, such as buying serves as a distraction or making purchases brings upon pleasure.

Other research indicates that a bad mood can in fact wreck havoc on your bank account. A negative mood can convince us we are deserving of retail therapy to help cheer us up, and is associated with decreased control over behavior and greater impulsivity, according to a study published in Psychology and Marketing. In other words, if we shop while in a bad mood, we’re likely to spend more money on items we hadn’t planned to purchase. Moreover, individuals in a bad mood are more likely to spend money on material items rather than experiences because the former offers instant gratification, allowing us to feel better faster.

Another reason we spend money pertains to our innate competitive nature. “Keeping up with the Joneses,” an idiom that describes the need to measure financial success to that of our peers, becomes an issue when we spend money we don’t have so we can feel that we measure up. If a neighbor purchases a newer, nicer car than our own, we may feel compelled to buy a car as nice, if not nicer. This competition can drive us straight into debt if we simply compare “things” rather than financial situations. Perhaps the neighbor was able to afford a new car because they just received a hefty promotion. By examining the outside picture only, we’re setting expectations for ourselves that lead to unnecessary stress and added financial pressures.

These behaviors are common year-round but are perhaps most prevalent during the winter holidays, a time of year that makes up 20 percent of total annual retail sales.

In 2013, people celebrating a winter holiday spent on average $730 on gifts, decorations, food, and more, according to statistics from the National Retail Federation (NRF). In 2014, holiday sales increased 4.1 percent and the NFR predicts they will increase 3.7 percent this year—a significant leap from the 2.5 percent average the country has seen throughout the past 10 years.

How to Avoid Pressure to Spend

Fortunately, there are ways to avoid overspending, even amid the chaos of the holiday season. Add these tactics to your holiday shopping strategy.

Check In With Yourself

If you feel a sudden need to drive to the mall to purchase that expensive item you’ve had your eye on, ask yourself, “Why?” Why do you feel compelled to spend money in that particular moment? More than likely, the urgency has more to do with a difficult situation you’re facing rather than the actual item itself.

Call a friend to talk things out, journal, or go for a walk in nature to better help you think things through rather than burying it under unnecessary material items.

Scan Your Social Circle

Do your friends handle money well themselves? Do they convince you to spend money you know you don’t have? The company you surround yourself with can impact our money spending tendencies. This isn’t to say you should drop these people from your life but rather be mindful of their tendencies. Meet them for a cup of coffee instead of going on a shopping spree.

Always Have a Shopping List

Prepare a list prior to shopping. Whether you’re purchasing Christmas presents or buying groceries, having the items you need written down will provide you with clarity and order while you’re shopping.

Reward yourself for sticking to your list and you’ll be more likely to commit to it: buy a cup of coffee while shopping or plan a fun activity for when you return home.

Keep Your Wallet Light

Avoid carrying credit or debit cards when going out, and instead stick with cash. Bring with you only what you think you will need. If you’re going out to dinner but don’t want to spend much, leave the $100 bills at home.

Limit Temptation

Think about what you struggle with most financially. Do you spend too much money at the mall? Eating out? Vacations? Make a list of where your money is going and take necessary steps to avoid temptations. For example, if you spend too much money on dining out on the weekends, stock your cupboard with groceries on Friday so you’ll be more likely to stay in and cook.

Relinquish the Desire to Keep Up

Give up the need to keep up with your neighbors, co-workers, and friends. Everyone’s financial situation is different and it’s dependent upon a variety of factors, least of all being one’s self worth. Comparison leads to debt and dissatisfaction with what you already have.

Appreciate what you currently have by practicing gratitude. Write down three things you’re grateful for daily and remind yourself of them throughout the day.

Be Accountable and Ask for Help

Hold yourself accountable by maintaining a healthy mindset, which will better equip you to stick to your money goals. A healthy mindset can be maintained through meditation, exercise, and performing activities you enjoy. Also, hold yourself accountable by planning ahead. Prepare before walking out the door so you won’t become overwhelmed and feel pressure to spend.

Don’t be afraid to ask a friend or family member—anyone in your life who is committed and reliable—to hold you accountable as well. Express your financial goals to them and ask for their encouragement to help you stay on track.