It is just stuff that all of us purchase without necessarily needing it. That expensive cup of coffee, a new pair of shoes, or yet another gadget that is similar to one you have is an example. You feel it is just a small indulgence before you realize that you have spent more than you actually have. Practically everyone does it. It is not necessarily a matter of poor financial planning. It is actually a matter of psychology related to spending.
How Feelings Affect What We Buy
Consuming is not just a matter of needs, but also of emotions. There are people who tend to spend when they feel happy, sad, stressed, and also when they feel bored. This is sort of a situation that one can label as emotional spending. Your body starts to generate a particular chemical when you make a purchase, and in simpler terms, that is why you feel so good. This is just a sort of reward for a short while.
The Role of Consumer Psychology
In fact, one of the main components of consumer psychology is analyzing everything we do based upon our thoughts, feelings, and beliefs when it comes to purchasing decisions. This is stuff that marketers are all too aware of. Colors, sounds, words, and scents can all be stimulated in order to invoke feelings. Smelling fresh bread in a grocery store attracts you to purchase food. Even arranging commodities around eye-level shelves or near cash registers is a factor of shopping psychology.
How Advertising Shapes Our Desires
Advertisers know that we very rarely make a purchase based purely on logic. An ad features a smiling family in a lovely home saying, “Make your life complete with this sofa.” They’re selling furniture, but it’s a whole lot more than that. We begin to make the slow transition in our thinking that in order to make people happy, we have to purchase things. This is why we overspend.
Factors Leading to Overspending
There are several reasons why we overspend, and all those reasons come from how our brains work. First of all, one of the main reasons why we overspend is that we want immediate gratification. We live in a world where everything is readily at our disposal–food, entertainment, and shopping. We do not want to wait or experience discomfort through waiting.
Another reason is comparison; social media is a huge contributing factor in this. You will get to see new clothes, cars, or travels that your friends have, and you will feel as if you’re missing out. You will start thinking, “I also deserve that.” This is why people often end up buying something that they do not need at all.
Moreover, people go out to shop just as a means to escape from their sources of stress. Sometimes we may have problems concerning finances or work, or perhaps issues pertaining to our personal life that we need immediate relief from. This relief is sought through spending, which is nothing but a temporarily relieving magic formula.
How impulse buying happens
“Impulse buying is a process that happens in a matter of seconds,” as you see, feel excited about it, and purchase it without planning. Additionally, shops make it easy for you by placing small and cheap products close to the checkout lane. This is why you often purchase gum, a magazine, or something cute while heading toward making payments. Online shopping sites are not to be outdone either, as they have their own techniques as well.
You respond to such messages emotionally, not intellectually. You say to yourself, “I will miss out if I do not purchase it at this moment.” FOMO, which is Fear of Missing Out, is one of the biggest reasons why people make purchases that they don’t need.
The Science of Spending Habits
Also, our spending behaviors were cultivated at a tender age because we grew up watching our parents’ handling of finances, and if they spent frequently or utilized spending as a form of reward, we emulated that behavior. Another form of cultivating a particular behavior is through repetition. Each time we spend and we feel a particular high, our brains record it, and soon it is an autopilot behavior.
“Hidden Traps of Modern Shopping”
Technology is making it easier than ever to spend. Online shops have your payment information, enable one-click buying, and start sending you mail daily. They also have algorithms that use your data based on your previous actions and offer you those things that will lure you personally.
Social media is also a contributing factor to this. Products get advertised through perfect images by influencers, and you feel as though you actually do need those products because buying them will make your life better, too. This is actually one of the reasons why we purchase products we do not need.
An aspect that is worth considering is that digital payments conceal the value of money in reality. When a person is using cash, it is an experience of transacting as a process of giving out money. In contrast, when done through a card or a mobile phone, it is just a tap.
The Emotional Spending Cycle
First, it is a feeling of boredom, sadness, or excitement. You purchase an item because of that feeling. You experience a moment of relief. This is followed by a spate of guilty feelings, especially when your accounts are checked. In a bid to forget that guilty conscience, everyone else goes back to the shop again.
Power of Awareness
Once you understand your shopping psychology, you begin to see a pattern emerge of how everything else is working together in your shopping decisions, and you are able to pause before you act. You also start to ask yourself, “Do I need this or just want it?”
In fact, that’s one question you ask that, over time, can completely change your perspective about money. You begin to connect spending with purpose as opposed to desire. That’s all behavioral finance—seeing that your decisions line up with your objectives, not your emotions.
Closing Thoughts
Psychology of Spending
Psychology of spending unearths that it is not just related to cash, it is to our emotions. In the end, true happiness lies in nothing we purchase but in our feelings of control and insight in recognizing that our happiness is not for sale.