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 is 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 is nothing wrong with spending money – but problems can arise when we spend money we do not 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. If we shop while in a bad mood, we are likely to spend more money on items we had not 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 do not 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 are 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 festival holidays, a time of year that makes up 20 percent of total annual retail sales.
How to Avoid Pressure to Spend
Fortunately, there are ways to avoid overspending, even amid the chaos of the holiday and festival seasons. 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 have 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 are 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 do not have? The company you surround yourself with, can impact our money spending tendencies. This is not 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 are purchasing festival presents or buying groceries, having the items you need written down will provide you with clarity and order while you are shopping.
Reward yourself for sticking to your list and you will 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 are going out to dinner but do not want to spend much, leave the Rs. 2000 bank notes at home.
Limit Temptation
Think about what you struggle with most financially. Do you spend too much money at the mall? Eating out? On 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 will 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 is 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 are grateful for daily and remind yourself of them throughout the day.