Want to buy less? Start by understanding the psychological mechanisms that cause overspending. And continue with our tips to avoid it.
We all sometimes spend more than we should on things we need less than we think. If you feel the need to take back control over your shopping behaviour, you’re in the right place. In this practical guide, we’ll go through the psychological mechanism of overspending. We’ll also give you some practical tips to avoid it.\
Psychological reasons we overspend
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Present bias
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Mental accounting
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Lack of awareness of buying triggers
Shopping behaviour is similar to other habitual behaviours in that it has its individual triggers. Perhaps for you being with a particular friend is a shopping trigger. For others, it can be something else – a mood, an environment, a time of day. Not being aware of what causes you to shop more leaves you vulnerable to repeating that behaviour.
Tips to avoid overspending
Here are some ideas to help you control your spending, which are easy to try right away.
Tip #1: Set milestones for your long-term goals
The best way to make long-term goals seem less distant is to create milestones for getting there. For example, if you want to buy a house in 10 years, set yourself a savings goal for each year until then. That will give you a tangible reason to say no to impulsive shopping temptations. And, equally importantly, achieving your milestone each year will give you pride and gratification that will last longer than any impulsive purchase.
Tip #2: Keep actual track of your budget and spending
This one is easy – if you want to manage your budget better, stop doing it in your head. Instead, make a simple spreadsheet (e.g. using this monthly budget template). Or, better yet, use an expense management app. Some of the most popular ones in Ireland include Spendee, You Need a Budget (YNAB), and Spend Tracker, but there’s a whole lot of choice out there. An app is better than a spreadsheet because your phone is with you all the time. You’re more likely to stick to your budget tracking if it’s effort-free (and if it comes with handy reminders and notifications).
Tip #3: Keep a shopping diary
No, not like in high school. A shopping diary would require you to take some notes when you feel the impulse to buy something. Write down the time of day, who you’re with, where you are, what music is playing in the shop, and anything else that seems relevant. After a few days or weeks of doing that, you’ll discover the patterns that make you more likely to overspend. Then, you can start eliminating the triggers for your shopping behaviour. For example, you might notice that every time you have your credit card on you, you feel emboldened to spend more than you would in cash. If that’s your trigger, you can consider leaving your credit card at home, or switching to a prepaid credit card. You can’t accumulate debt on a prepaid credit card, and you can only spend what you have already prepaid.