Flourish Financially Blog

The Dirty Dozen

12 Culprits Keeping You from Practicing Good Spending Habits
Kathy Longo, CFP®, CAP®, CDFA® Wednesday, 02 October 2019

The Dirty Dozen

Do you ever wake up in the morning with the best financial intentions, only to find your goals thwarted as your day goes on? If so, you’re not alone. The world around us is full of outside influences that challenge our ability to make good financial decisions every hour of every day.

Short of sequestering yourself in your home and practicing total avoidance, there’s no way to completely protect yourself from these influences. However, recognizing their potential impact and working to minimize your exposure can help you remain on track with your financial goals.

Familiarize yourself with these twelve enemies of good spending habits so they won’t derail your future plans:

Enemy #1: Sales 

It goes without saying that you shouldn’t buy something just because it’s a bargain. However, advertisers use tactics devised to make you believe you shouldn’t pass up a good deal – even if it’s something you don’t really need or want.

Your Smart Spending Strategy

Avoid the impulse to snag that deal by keeping lists of items you need and items you want and referring to them before getting lost in the clearance aisle. When you are reminded of your actual needs and wants, as opposed to what advertisers want to make you believe, you will be less susceptible to their tactics and better able to make wise purchasing decisions.

Enemy #2: Social Media 

There’s nothing quite like the ease of social media for keeping track of and communicating with friends and family. It’s an incredibly efficient and convenient way to stay up to speed during even the most hectic times, which is one reason so many people use it. Plus, it can be a lot of fun!

Here’s the thing, though: advertisers know you’re going to spend time on social media, and every platform is full of advertisements, influencers and strategic product placements designed to get you to buy more things. Sponsored posts look just like your friends’ status updates, social media influencers are making their living persuading people to buy their sponsored products and technology allows companies to serve up ads that they know appeal to you based on information included in your social profiles. All of this adds up to a veritable advertising tornado, spinning message after message at you every time you log on, all with the goal of nudging you to spend more money.

As if that wasn’t enough, social media also lets us see the “highlight reel” of anyone we follow. This means we see what our friends and acquaintances want us to see – that new car, pictures from their expensive honeymoon, a meal at a fancy restaurant – rather than a full picture of their life. It can have the psychological effect of making you believe you need to keep up by spending your own money on these things, too.

Your Smart Spending Strategy

When you feel social media getting to you in this way, remind yourself of the financial peril involved in falling into these spending traps and work to avoid them. Sometimes, going cold turkey and taking a break from social media can help you reset your brain to focus on what’s important to you. If you aren’t sure about taking it to that extreme, though, consider unfollowing people and companies who are actively encouraging you to make bad spending choices.

Enemy #3: Online Message Boards 

Even if you’re avoiding social media, you won’t be immune from online influence. Message boards like Reddit and comment sections on product websites are oftentimes indirectly promoting products and services you don’t really need. They splice in advertisements amidst topical information in the hopes you’ll take the bait – and many people do.

Your Smart Spending Strategy

Avoid getting caught in this trap by avoiding message boards – it’s really that simple. If you’ve established relationships with users you’d like to keep in touch with, provide them with your email address as a means of contact, then disengage from the community. After a few days, you won’t even miss it, and your bank account will thank you for it.

Enemy #4: ‘News’ Reports

Alarmingly, the word ‘news’ has taken on a new meaning in our ad-saturated world. Oftentimes, a ‘news’ story on a product is really just a plug for purchasing it. We’ve all seen these types of stories, claiming a new and improved product will solve all your problems, but they can’t be trusted in the way a traditional reporting of the news can. These new types of ‘news’ reports are short on facts and heavy on editorializing, and their goal is to create a need for a product, often where no such need truly exists.

Your Smart Spending Strategy

Don’t fall for this misleading information. Learn to recognize when something is a paid ad placement and seek out credible journalism on a topic instead.

Enemy #5: Spending Time in Stores (Including Online)

This might seem obvious, but it’s a good reminder for most of us: while it may seem like stores exist to serve our needs, they’re always serving their own bottom lines first. The way a store is organized, the way products are placed, the music playing over the loudspeakers, the temperature of the store… all of these details are strategically designed to encourage you to open your wallet. The same is true of an online retailer, as they use digital marketing strategies like color and font choice on their sites to influence you into taking the action they want--buying their products or services.

Your Smart Spending Strategy

Stop willingly putting yourself in a position to be influenced by tricks of the marketing trade. Don’t go into a store just to kill time, fight the urge to browse new release items and delete shopping apps from your phone. Instead, be intentional about your shopping, visiting a store in person or online only when you know what you need and how much you’re willing to pay for it.

Enemy #6: Shopping Without a List  

This mistake is similar to going into a store just to browse – you are leaving yourself vulnerable to making poor spending choices by failing to have a plan. Even for items like food or household products, entering a store without a list means you’ll likely find yourself wandering and placing items in your cart that you don’t truly need.

Your Smart Spending Strategy

Wherever you go, no matter what type of product you’re buying, make a list before you shop – and stick to it. This ensures you’re buying only the things you genuinely want or need, rather than making in-store decisions influenced by all the advertising around you.

Enemy #7: Your Friends and Family 

There are few people who influence us more than the people we’re closest to, and that makes family and friends a potentially dangerous influence on our spending. If we spend time with people who are avid consumers of products, we are likely to begin exhibiting similar shopping behaviors. This is especially true if social events in your friend circle tend to revolve around shopping or otherwise spending money.


Related: Your Personal Complicated Relationship With Money


Your Smart Spending Strategy

This can be a tough one because you can’t simply “unplug” from your real-life relationships like you can from social media. Something that can be helpful, though, is to recognize in the moment that a conversation or activity is about to veer into a potentially unwise spending situation. Use your influence with the people closest to you to steer away from expensive dinners in favor of a potluck at your place, for instance. In time, you may just find that you’re influencing your friends to spend their money more wisely.

Enemy #8: Short-Term Thinking 

This one is, essentially, a representation of the enemy within. Its human nature to think in terms of the near future, and that causes us to overvalue short-term benefits we can easily see and understand. Truly, it can be psychologically difficult to maintain concrete plans for the long-term when our brains get so preoccupied with serving the needs of the here and now. Too often, this leads to spending money out of convenience or impulse, rather than making decisions that serve our long-term financial goals. This is why so many people find their bank accounts dwindling month after month with no real understanding of where all the money went.

Your Smart Spending Strategy

If you find yourself facing this predicament, you need a strategy that curbs your short-term impulses. One tried and true method is to force yourself to answer this question each and every time you are tempted to buy something: In five years, will I be happy I made this purchase? Taking this conscious step back and reflecting on your future will help you make meaningful purchases rather than wasteful ones.

Enemy #9: Procrastination

This is a big one. Just as short-term thinking can cause us to make impulsive spending decisions, it’s also one of the reasons we wait to do things until the last minute, when they finally arrive on our short-term radar. If you’ve ever experienced this, you likely know the feeling of panic that ensues due to inadequate planning. One such scenario where this plays out for many people is holiday gift shopping. Procrastination usually means you don’t have time to shop around for the best price or research the most reliable brand. Instead, you find yourself paying full price for a gift item that is less than optimal.

Your Smart Spending Strategy

The best way to avoid the pitfall of procrastination is to plan, plan, and plan some more. As soon as you know of an upcoming gift need, begin preparing for it by brainstorming gift ideas and keeping your eyes on identified products for potential sales. You can even start putting money aside so that you’re slowly saving for gifts, rather than depleting your savings in one fell swoop.


Related article: Managing Money When You are Busy


Enemy #10: Lack of Impulse Control

Is that inner voice telling you to go ahead and spend to satisfy your short-term wants, and that there’s plenty of time to make better choices in the future? This is a common occurrence, and it can be very difficult to control this inner dialogue. Letting your momentary temptations – conscious or subconscious – run the show is a slippery slope, and it can take time to train yourself to fight against it and make better long-term choices.

Your Smart Spending Strategy

If you know you’re prone to giving in to temptation and making purchases you’ll later regret, it’s best to remove yourself from situations that tempt you. For instance, avoid shopping unless you have a particular need, and never save your credit card information with online retailers for easy purchases. You can also use strategies like only taking a certain amount of cash when you leave the house or canceling credit cards you’re often tempted to use when the cash runs out.

Enemy #11: Believing You Are Immune from Advertising and Marketing Influences

Whether you realize it or not, you are bombarded with advertising and strategic marketing strategies everywhere you go. They are pervasive in our culture, and their influence is only growing as new forms of media occupy more of our time, like Instagram and Twitter. Advertisers and marketers are smart – they use human psychology to influence our decision-making and our actions, and they are often so subtle that we don’t even realize their effects on us. Many people believe they are too smart to “fall for” such practices, but it is human nature to pick up on persuasive messages around us.

Your Smart Spending Strategy

Keep your guard up at all times, realizing that there are persuasive messages coming at you from nearly every angle. Once you realize that something is being used to serve you ads and strategic marketing, spend less time with it in order to minimize its influence. For example, if you’re watching television, mute the commercials so you won’t risk susceptibility to their advertising messaging.

Enemy #12: Television Shows Featuring Lots of Product Placement

Product placement refers to the practice of putting products into a scene that has nothing to do with the plot of the show – but everything to do with invading your subconscious mind. For example, pay attention next time your favorite characters get into a car; you’re likely to see the camera pan across the automobile’s brand logo as part of the scene, even if it has nothing at all to do with the scene itself.

Your Smart Spending Strategy

Realizing the potential impact of product placement is half the battle. Once you’re aware of it, it’s easy to spot, and sometimes even laughable in its egregiousness. Watching less television is also an effective strategy, of course, if you want to minimize the impact of product placement on your financial future.

A Few Final Words of Advice

We live in a world rife with negative spending influences, and there’s no real way to completely protect yourself. However, that doesn’t mean your financial future has to suffer. Knowledge of the enemies of good spending – and the strategies to overcome them – will help you to block out all the noise and continue focusing on reaching your long-term financial goals.

YOU’VE GOT THIS!

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About the Author

Kathy Longo, CFP®, CAP®, CDFA®

Kathy Longo, CFP®, CAP®, CDFA®

Kathy Longo brings over 25 years of expertise and experience to Flourish Wealth Management. Kathy is wholly dedicated to improving the life of each client and finds joy in making complex matters simple and easy to understand. She excels at asking the right questions, uncovering new possibilities and implementing the most advantageous strategies for success. Playing such a pivotal role in her clients’ lives remains an honor and a privilege. After earning a degree in Financial Planning and Counseling from Purdue University, she began her career at a small firm in Palatine, Illinois where she worked directly with clients while learning to build a viable, client-centric business. Over the years, she gained extensive knowledge and wisdom working as a wealth manager, financial planner, firm manager and business owner at notable, various sized companies in both Chicago and Minneapolis.

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