With all of the advertising, commericals, and public perception influencing consumer spending these days, its hard to determine what causes us to make certain decisions when it comes to spending money. While many people enter into a money spending situation with the best of intentions, it is very easy for some of us to “rationalize” our purchases to a point at which they are not in line with our original intent. Often, we tell ourselves “little white lies” in the heat of the moment to make ourselves feel better about certain purchases. Some of these rationalizations include the following:
I need this. Besides food shelter, clothing, and heat, there are really not many things that we really need. While many things are not really extravagant or wasteful, separating your “needs” from your “wants” is an important part of making smart money decisions.
It’s such a good deal, I have to buy it. How many times have you talked yourself into buying something because it was on sale? Obviously, the merchant is still making money on the deal, so most of the time we probably don’t even know how good of a deal we got. There is also the variation of this one, It was on sale, so I really saved X dollars. Sure you did.
I will cut back on X if I let myself buy Y. You might tell yourself that you will stop buying coffee on the way to work everyday so you can buy a new pair of shoes. It may work for a day or so, but frequently we fall back to our old habits in a short period of time.
I can afford the payments, I’ll be getting a raise next month, year, etc. This is usually for larger purchase or something with a recurring payment, such as a car payment, cell phone plan, etc. While you may be getting a raise, you probably don’t know what it will be, and if you have to tell yourself this, you probably shouldn’t buy it right now either.
I deserve it or I need to reward myself. While you do need to reward yourself on occasion, this one can easily be “overused”.
This will make my life easier. You can often rationalize a purchase because you “just know” this new item will make your life easier and give you more free time, but often that is not the case.
I’ll try it out and cancel it if I don’t like it. It could be a gym membership, or premium cable channels. Chances are, not only will you not cancel the service, but you may not even ending up using it.
I’ll put this on my credit card but pay it off before the bill is due. I’ve done this one many times in the past. Usually, what would happen to me is I would not pay it off right away, and when the bill came the next month I had forgotten about it, and ended up scrambling to try to pay it off.
This other brand, model, or item is a little more than I planned, but it is worth it.This can be true when buying a better quality item that may have a lower overall cost over its life, but frequently we don’t really take the time to do the research to determine if it is true.
One of the keys to becoming a “saavy” consumer, is to carefully plan your larger purchases, and to avoid getting yourself into situations where you may falter. Waiting a certain period of time, like a week or month, can also give you time to determine if you really “need” something, as opposed to setting yourself up to make impulse purchases.
Photo by FreaksAnon
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