The other day I was sitting in the office of Dan Ariely at Duke University and we were chatting about behavioral economics from the point of view of getting out of debt.
During the conversation the comment was made that if people became aware of the connection between spending and the “high” or good feelings they experienced as a result, then it would be possible to modify that behavior for a better result.
Many people overspend or shop compulsively. And when it comes to the residual debt, the debt is the symptom of the underlying issue and not the problem itself.
If we can be more aware of why we shop and the hidden forces that entice us to spend then we could fine tune those “sprees” and have an overall better outcome.
The common advice to people that shop a lot is to stop doing that but is that really effective advice? I don’t think so. I clearly remember a couple sitting in front of me and the husband was screaming at his wife to stop shopping. When he finished I asked him how that approach was working out for him. “Not to well actually,” he said. Shocker (sarcasm).
That approach is just about as effective and me telling you to put down the favorite chocolate you crave and lose weight when the weight isn’t the benefit you are seeking, the emotional feeling of eating that chocolate is.
When it comes to recreational shopping it as a big generalization but men tend to buy bigger items (cars, computers, electronics) less frequently and women tend to buy smaller items more frequently. For the sake of this discussion I’m going to focus on the smaller item shopping behavior.
The stress relief and emotional benefit people achieve from shopping allows them to reduce stress, distracts them from reality of their situation, allows them to get a positive emotional benefit by giving gifts, etc.
But shopping is much like a drug. And the reality is the more you shop, the more shopping it takes to achieve the same emotional benefit. Just like the more you take heroin, the more heroin you need to get the same high. Or the more you gamble, the more gambling you do to experience the same pleasure.
So knowing that, we also know if you space out your purchases and limit the dollar amount of the purchase, you can experience the same maximum emotional benefit you would otherwise achieve from escalating large purchases.
Ironically, yesterday I was being interviewed about the very same issue with QVC and home shopping and it occurred to me that if a shopper set strict boundaries on the time and amount of their spending trips they could significantly cut back on the amount they spend and not have to give up spending altogether. That’s actually a more realistic solution for many.
Hey, life is short. The goal is not to cut out all fun, it’s to moderate our discretionary spending so it fits neatly inside our income earning life. So let’s do that.
If you discover you have been spending $800 a month on stuff, try the following approach for the next month and see if you can satisfy you desires and relieve some stress by shopping.
What I’d like for you to do is to set a boundary of going on one shopping trip a week and spending no more than $40 on each trip. At the end of the month you will have spent $160, achieved a much stronger emotional benefit and found some balance in your life.
Of course, it might be that at some point you’ll find the importance of shopping to not be as necessary for you. The more you are aware of why you shop, the better choices you can make about if you want to buy a particular item. If you can stop for just a moment before a purchase and ask yourself what the item in your hands means to you and if it is an item you want to spend your weekly “shopping money” on is a necessity, then go for it if you decide it makes sense.
In a perfect world there would be some wand to wave or pill to take to suddenly eliminate financial behavior that others think is unnecessary. Yea, that world doesn’t exist. So here is the real world we need to come up with real solutions, to achieve a balance, rein in unconscious spending and allow us to live a life worth living.
In all of my years of assisting people with debt the lessons are that awareness extends further than punishment and by changing an underlying behavior we can achieve a greater benefit.
Look at it this way, if chocolate was your favorite food vice. Are you much more likely to eliminate your intake if I tell you to stop, or give you a good way to enjoy reasonable portions that allow you to experience the thrill of the chocolate in such a way that it doesn’t send your monthly choleric intake off the map. You know I’m right here.
If you would like to explore these issues more, you can download my free book titled “The Path to Happiness and Wealth.”
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
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