Understand your spending style to make better buys, writes Chadwicks financial planner
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My New Year's resolution is to get better at spending money. Buying stuff has never been easier. Too easy.
Frictionless payments with contactless cards mean shopping trips result in bags bulging with stuff that you have no real memory of buying and even less desire of owning; wardrobes overflow with unworn bargains that seemed too good to miss; kitchen cupboards are jammed with gadgets that are too valuable to throw away yet too hopeless to use.
If I’m going to have any chance of sticking to my resolution I need to understand the behavioural tricks used to prise open my wallet.
Sales are a minefield – if I see two discounted TVs I’ll probably go for the one with a 50% discount even if the one with a 30% discount is actually better value – the big discount label grabs my attention and crowds-out deeper reasoning.
If I decide to buy my wife a handbag (never a good idea, but bear with me), I’ll be shocked that the shop has arranged the displays so the first bag I see costs over £1,000, but I’ll also feel the £500 ones are really quite good value.
Without the pricier one giving a reference point, I wouldn’t dream of spending hundreds of pounds on something that, to me, seems like a slightly less practical bag-for-life.
Give me too many options and I start to fret – grabbing whatever is nearest simply to get away from the pain of choice overload.
If I’m not going to single-handedly rescue the retail sector then I need to have a strategy to fight back against these behavioural frailties.
I could tangibilise the money I’m spending - cash is inconvenient but it feels more ‘real’ than a card so I’m more likely to spend it carefully.
I could train myself to look beyond the discount stickers and BOGOF offers to see if I’m buying something I actually want.
I could shop around to better understand what a fair price is rather than relying on the shopkeeper give me my reference point.
These changes are unlikely to stop me having that sickening feeling as I open my wardrobe door to be reminded of that unwise impulse buy but hopefully it will happen less often.