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COMBAT THE ‘CONSUMPTION TRAP’
11 Ways to Avoid Shopping Traps and Spend Less Money
Each and every day we wake up, you and I are confronted by three powerful forces that exist to devour our hard-earned money. Each one of these forces is powerful in and of itself. However, when these three forces are combined, their strength is exponentially increased.
First, let me be clear that each of these forces is amoral. That is, they are not evil, bad, or wrong in any way. In fact, they all provide necessary functions in our modern era. However, over the years, these three forces have learned to work in a unified way to slowly erode your wealth on a consistent basis.
The three powerful financial forces that make up the Consumption Trap and that are working against you are:
- Corporations. Corporations are in business to find a need in the marketplace and then fill it with an appropriate product or service.
- Media/Advertisers. The Media is in business to promote the products and services created by corporations.
- Financial Institutions. Financial Institutions are in business to loan money on products and services created by corporations that have been promoted by the Media.
You may be thinking to yourself, “Really?” How can these three industries cause any harm to my financial plan? The truth is that they cannot. At least, not without your permission.
There are several ways in which to avoid and overcome the Consumption Trap. There is, of course, the obvious solution of staying away from all shopping centers for the rest of your life, but that is not very practical for most individuals. So, let’s talk about how to avoid the Consumption Trap while still enjoying the occasional outing to the mall.
Stores spend billions on the science of getting you to spend your hard-earned cash on their products. They understand how your brain works and then use this knowledge against you. Below are several tools you can use to combat the inevitable traps set against you and, ultimately, spend less when you go shopping.
1. Be wary of stores that are new to you.
Why? We spend more money when we are in a store that is new to us. This is because dopamine- a wonderful feel good drug in our brain– is activated when we experience something new or exciting. (This is one reason we spend more when we are on vacation. We are in a novel situation experiencing new stores.) So try hard to come back to the store to buy your discovery. You may want to hit the new store at the beginning of your shopping trip and then tell yourself you’ll come back to the store later to make your purchase. Trust me, it simply won’t be as exciting the second time around and you’ll make a more reasoned choice.
2. Leave your credit cards (and debit cards) at home when you go out shopping.
Stores desperately want you to use a credit card because they know you’ll spend more if you do. (Macy’s is the worst offender, by the way. They are very aggressive in trying to get you to use a Macy’s card. Have you noticed?!) If you know the money is going to come directly out of your bank account, you will be more mindful and usually spend less. In fact, the evidence is overwhelming that when you buy items with a credit card, particularly things you enjoy, you spend 20-30% more. There is simply too much of a delay between basking in the pleasure of buying those shoes and feeling the pain of having to pay for them– later. You want to “feel” the purchase in the moment.
Not only is it wise to leave the credit cards at home, but go ahead and leave the debit card and the checkbook at home too. In today’s world of online banking and immediate account transfers, it is too easy to spend more than you have in your bank account and do a quick transfer from savings when you get home (or even before you get home via mobile banking on your phone). Plan out your shopping trip using the “need list” and “want list” (see item #4 on this list) and take only the cash you can afford to spend. I have found that it is much more difficult to part with that $100 bill than to do a quick swipe of a debit card.
3. The magic 90 minutes.
Stores and malls do many things to get you into the “zone” of shopping. Notice that there are never any clocks on the walls of a store, and they often don’t have windows. They are hiding the passage of time. Well, after 90 minutes, you do start to zone out and mindless spending goes up. So do this: set the timer on your phone for 90 minutes. When it goes off, simply stop for a bit. Take a break and have a cup of tea. Look at what you’ve purchased and think about your plan. (Do you want to return anything you just bought?) I’m not saying that it is unwise to shop for more than 90 minutes, but taking a break every 90 minutes helps to keep you from overspending.
4. Limit the number of stores you visit.
It’s very simple: the more stores you visit the more you buy. People may tell themselves that they are comparison-shopping. But often people feel like they need to buy something for all the legwork they’ve put in! You become very “invested” in how much time you’ve put in. We tell ourselves, “I should buy at least one item or all this time and effort will be wasted.” First of all, if you do not find an item that fits your specifications at a price you can afford, do not feel like you have wasted your time. Tell yourself that you are not settling for something that you don’t absolutely love. Second, try to narrow down your search by performing online research beforehand (or even calling around before you leave the house). By doing this, you can eliminate certain stores that you know will not have the item you desire.
5. Don’t carry items around with you that you are contemplating purchasing in a store.
The issue is that when you carry products around with you, they begin to feel like yours. You get used to them and you feel a little “pain” if you have to put them back. You feel like you are losing something. (Humans are funny. We actually hate pain and loss more than we love pleasure and gain.) Hence, items that get carried around are more likely to be bought. So if you are eyeing something, keep it on the rack or shelf until you decide. And if you’re worried someone will swoop it up before you decide, “hide” it on a different rack or shelf. Finally, the worst thing you can do is to ask the clerk to hold an item for you. If you go this far, chances are you will end up purchasing the item if, for no other reason, a fear of saying no to the clerk.
6. Don’t interact with sales people too much.
Yes, they are quite friendly. But the more you interact with them, the more likely you are to purchase from them, for several reasons. One is that they are often skilled at selling to you. But people often unconsciously feel, after a point, that they don’t want to let down a sales person who has helped them. I have definitely experienced this feeling before, so I try to avoid it. My husband, on the other hand, is a master at getting tons of great information and even freebies from store clerks without feeling any obligation to buy. If we could all have this power!
7. Do not apply for store credit cards… no matter how big the discount is.
You see these offers every single time you enter a store. “Save 15% on your entire order when you apply for our credit card today,” reads the sign above every clothing rack. These offers are tempting and even seem to make sense. After all, isn’t saving money a good thing? Wouldn’t it be better to pay $85 for those shoes you want versus $100? All you have to do is fill out some personal information and the savings will abound.
Unfortunately, a multitude of negatives also abound when you decide to fill out that credit card application. First, each time you apply for a credit card, the store pulls your credit report. When this happens, an inquiry is posted to your credit file. Too many of these inquiries can actually hurt your credit score even if you never miss a payment. Second, and probably the most obvious downside, is if you cannot pay off the purchase amount in full by the due date, interest will begin to accrue, negating your initial savings.
Lastly, and most important in spending less money, you should avoid store credit cards because of the “customer loyalty” they tend to induce. Once you obtain a store credit card, you will undoubtedly begin receiving catalogs and emails galore, containing the latest and greatest products, coupons, and other incentives that seem too good to pass up. Now that you have the store’s credit card in your wallet, you unconsciously become a more loyal customer to that store and will tend to go back more often than you would have if you had just paid cash for those must-have shoes.
8. Make a “need list” and a “want list” and stick to them.
Although you can have the best intentions to avoid spending too much while shopping, you will inevitably shop and, yes, spend money from time to time. And that is OK. However, one powerful tool that I have implemented is a “need list” and a “want list”. I keep these on my smartphone so that I have them wherever I go. These lists consist of items that I would typically buy when I’m out shopping (at the mall, superstore, home and garden store, etc), not items that I would buy weekly or monthly at the grocery store.
The need list consists of items that are, well, needed or essential for your daily or weekly routine. For example, when my running shoes start falling apart (which they always do because I track lots of miles on them), a new pair of running shoes will go on my need list. This pair of shoes is essential in my life because I exercise on a routine basis.
The want list, on the other hand, is made up of non-essentials that I would like to have and that I might purchase if I find a good deal. I keep this list under ten items at all times, which prevents me from justifying a huge shopping spree (“Honey, all of this stuff was on the list. I can’t help it if they cost $500.”) A few things that you might find on my want list include: new living room lamps, jeans, sandals, sunglasses, or a purse (as a side note, I often find items from my want list at garage sales, which helps me spend even less!). For the men reading this article, your list may contain sports equipment, new (non-essential) clothing, power tools, or those shiny hubcaps that would look great on your vehicle. The point is that you make a list, keep it under ten or so items, and stick to it when you find yourself in a shopping situation. This way, if you love to shop, you allow yourself some freedom to purchase items, but you vow to only buy what is on your list, at the best price you can find.
9. Browse at a bookstore instead of the mall.
This is one of my favorite ways to avoid spending too much money. If you are dying to get out of the house and there is nothing else to do besides entering the world of consumerism, take heart. Make your destination a local bookstore instead of a local department store. At a bookstore, you can browse and actually “consume” the material without ever spending a dime. You can sit in a bookstore all day long and read as much as you want for free. Not only are you literally saving money, but you might also get a little smarter too (unless, of course, you are reading the latest vampire novel). BONUS TIP: If you decide you must buy a book while browsing, use your smartphone to check for a lower price on Amazon.
10. Do not go shopping with a spendthrift.
I can tell you from personal experience that whomever you are shopping with has a tremendous impact on your own shopping experience. When I was in my early twenties, I would go shopping with friends who had quite a bit more discretionary cash than I did (or at least their shopping habits made it seem that way). Even at that age, I was a saver, so I usually made smart decisions with my purchases. But when one of my friends would purchase an item at a clothing store, it would increase the likelihood of me buying something too, even if I had not planned to spend any money that day. However, when I shop with someone like my mother, who is a bargain shopper and a wise saver, I end up keeping almost all the cash I left home with, plus, I am less likely to end up with buyer’s remorse.
11. Wait at least two days to buy anything over $50.
If you truly need the item, then you will still need it in two days. If you don’t really need it, chances are you will either forget about it completely or you will have enough time to find a better deal online or at another store, or at least find a coupon for the item. Also, if you have children, this is a wonderful strategy to use to teach them the concept of delayed gratification. If they see you setting the example, they will be more likely to internalize it.
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We are on vacation this week. Our regular FTMDaily Briefing, complete with news headlines and daily charts, will resume on March 3. However, we will continue providing our daily trading idea for FTM Insiders. Have a great week!
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