As we enter enter the holiday season we will be inundated with message about what we "must" buy to make this holiday season a success! Science tells us that what motivates all behaviour is either the avoidance of pain or the promise of pleasure. From working to eating to sex, and, including why we shop is all motivated by either the avoidance of pain of the poursuit of pleasure. This holiday season be mindful about what motivates your spending.
Why do we buy things? What motivates all our behaviour is either the avoidance of pain or the promise of pleasure. From working to eating to sex. And, including what we chose to buy. We are all either looking for ways to avoid pain or experience pleasure in our lives. This is also the basis of consumer behavior.
Cloaked in a myriad of different excuses. The extra new pair of shoes you felt you deserved. The new Mercedes Benz, because you can afford it. The trip to Kenya for the sake of experiencing something novel. Everything we do is either to avoid pain or to experience pleasure.
Retailers are aware of this. And the entire experience of shopping is in response to these two driving forces. With the holiday season coming up soon, we will see Christmas decorations everywhere! Make this year different. Be mindful about your spending.
Look back at your last five purchases. They don’t have to be significant purchases.
That latte on the way to work. The new dress you picked up in the mall on the way back from lunch. Even the carton of milk your spouse reminded you to pick up on your way back from work.
Your last few financial decisions could have been major. Changing the mix in your investment portfolio. Or buying your first home. Whatever it is, big or small, you were likely motivated by pleasure or the avoidance of pain. How do retailers get you to spend using these two primal needs?
The Fear of Missing Out
Advertisers in the US spent $242.54 billion in 2020. Observe current advertising. The message is consistent: you will be missing out in some way if you do not buy what is being offered.
Whether you’d be missing out on belonging with your friends if you don’t drink beer with them. Missing out on experiences if you don’t travel as your friends do on social media. Not keeping up with the latest gossip at the water cooler if you don’t read the tabloids. And missing out on receiving the love you want if you don’t dress a certain way. And getting approval from society for the new house you purchased.
This is tapping into the human need for approval and belonging. And the pain of not belonging is what drives so many of us. This fear of missing out is further enhanced with the offer of a discount. Who wants to miss out on a discount? This has people buying things they don’t need because of the discount.
Six thousand adults surveyed in the United States, Denmark, Canada, and the Netherlands found that spending money on ways to save time led to greater life satisfaction.
The same researchers gave sixty adults to spend $40 on a time-saving purchase on one weekend. Such as hiring someone to clean their home. The next weekend these same adults received $40 to make a material purchase. People reported feeling happier when they spent money on a time-saving purchase than on a material purchase.
Yes, most of us would do anything to avoid the “pain” of household chores. Trading money for more free time leads to a greater sense of well-being. People are willing to pay for ease or to avoid pain.
The Promise of Pleasure
A relentless pursuit of pleasure may explain some addictions. The promise of pleasure from that drink or that drug. It could start in part with the need to belong, especially with teenagers. Some studies claim that addictions are an attempt to suppress pain. It may have started with the need to achieve pleasure but turned into something more. Pornography addiction may start with the pursuit of pleasure.
Needs vs. Wants
A large part of our spending is for basic survival: food, shelter, and clothing. But what about the $1000 jacket? Or the $4000 Prada bag? It goes beyond just a need to keep yourself warm or a place to keep your things.
Becoming aware of why you spend creates greater awareness. If you are running into financial problems or consistently resorting to credit to pay for your purchases, you may want to ask yourself what need you are trying to meet through your spending habits.
Can you meet that need in a way that has less of a financial impact on your bottom line?
What can you do?
With the holiday season soon upon us, what can you do? The need to belong and to enjoy life is fundamental to our humanity. We need to recognize that and respect it within the context of creating a balanced life. Achieving a sense of belonging and adventure should not cost you your financial future. As would be the case if you got into a large amount of debt to achieve these needs.
Set a Budget
Set a spending budget for birthdays and the holiday season. What are you willing to give up to achieve a likely increase in expenses? Stick to your budget. You do not want to spend the first six months of the new year paying for excessive spending over Christmas.
We all have a wish list. Saying ‘yes’ to one thing may mean saying ‘no” to something else. Our priorities with how we use our money should align with your values. You may value a comfortable retirement but what you need most now is to own a home for a sense of security. Set aside savings towards this goal.
Save For Your Purchases
To avoid the pain of debt, direct a portion of your income towards a savings plan. That way you can enjoy the benefits of paying cash for the things you want. Or you may gain pleasure from seeing your savings grow into a nice “nest egg” that you may not even want to touch it. And just decide to do without some of the frivolous purchases you may have made before on your credit card!
We tell ourselves it’s the thought that counts. So, why not let the thought of it count. The holiday season is a great time to get creative. A handmade gift may be more meaningful than a store-bought one. For store-bought items look for deep discounts.
Other than the idea of whether we can afford it or not, most of us don’t give a second thought to why we spend. Observe your spending habits. What needs are you trying to meet? Are you are getting into debt to meet some of these needs? Can you find healthier ways to meet those needs than using your credit card?
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Through coaching, webinars and public speaking Jennifer helps people and businesses discover ways to create success on their terms. She has written numerous books on money: Women and Money: 7 Principles Every Woman Needs to Know to Be Financially Prepared in Any Economy and Growing Up With Money: Raising Financially Resilient Kids in an Age of Uncertainty. You can reach her at email@example.com
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