It’s late in the year, which means the holiday sales period has well and truly begun. If you haven’t seen your spending increase yet, the possibility is looming.
And you’re probably worried about spending your money wisely.
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Additionally, shopping can be a trying experience and our attitudes towards money are tied to all kinds of feelings.
Based on psychology, here are three tips to improve how you spend your hard-earned cash this holiday season.
Before buying – patience is your friend
One of the amazing features of the human mind is that we can mentally travel through time: we can imagine what the future holds feel As. Scientists call this “affective forecasting”.
Thinking about a future trip – imagining the warm sun, the sand between your toes, finding yourself smiling – is an example of such mental time travel.
However, it turns out that we are not very good at affective forecasting. We are wrong not only about the emotions we are going to experience, but also about their intensity and duration. Lottery winners are a classic example of this – contrary to expectations, many are not happy, or not happy for long.
More importantly, you can derive happiness from just anticipating future experiences. For example, one study measured the happiness of 974 people going on a trip versus 556 people not going on a trip. As expected, vacationers were relatively happier – but only before the trip.
So how can we take advantage of our ability to mentally time travel?
Tip #1: Pay now, consume later. These days, fueled by the rise of “buy now, pay later” options, we can consume whatever we want immediately. However, this instant gratification deprives us of an essential source of happiness: anticipation. A better strategy is to commit to buying something and wait a while before consuming it.
At the point of sale – note that you pay
A fatality of every purchase is to spend money. This represents a cost, both in terms of monetary value but also the opportunity to buy other things.
Costs are a form of loss, and we don’t like losing things. For this reason, it hurts psychologically to spend money. Scientists call this the “pain of paying”.
According to a theory of shopping, we decide to buy after having made a mental calculation: is the anticipated pleasure of consuming greater than the anticipated pain of buying?
This calculation is even represented in the brain. For example, a study of the brains of people with fMRI scans while they bought food found neural activity in areas related to higher-order affective pain processing, which correlated with price. raised.
How did you pay for your last meal? Did you have to rummage through your wallet or purse trying to extract the appropriate combination of banknotes and coins? Maybe you just pulled out a plastic card and swiped it through the reader? Or maybe you absent-mindedly touched your smartphone at the machine.
Turns out your payment method changes the pain you feel. In one study, researchers asked some university employees if they would like to buy a cup at a discount. Half were only allowed to pay in cash, while the other half had to use a debit or credit card.
Those who paid in cash reported having more difficulty paying. So how can you use this to your advantage?
Tip #2: Increase the pain. If you are worried about spending too much during this holiday period, increase the penalty to pay. You can do this by using cash or by receiving a notification whenever money leaves your account.
After purchase – stop chasing rainbows
A fundamental characteristic of human beings is that we are adaptive – we easily get used to the new normal. This also applies to our purchases. Scientists call this “hedonic adaptation”: over time, consuming the same thing brings diminishing happiness.
Do you remember the day you received your smartphone? You may have felt joy stroking the smooth aluminum back and watching the light shine on the spotless glass. Now look at your phone. What happened to joy?
It is normal to experience hedonic adaptation. However, one problem is that we do not anticipate it.
Do you remember affective forecasting? Since satisfaction is a function of performance expectations, when we fail to adjust our expectations in light of the inevitable hedonic adaptation, we end up being dissatisfied.
The second problem with hedonic adaptation is that the obvious solution seems to be to buy something new. Maybe you need a new smartphone to replace your slightly scratched old one? If that is your thought, you have just hopped on the hedonic treadmill.
Now the only way to maintain your happiness is to spend more and more money to get better and better versions of everything. So how can you get off this treadmill?
Tip #3: Buy experiences, not things. It turns out that people end up happier when they buy experiences rather than things. For example, a study that tracked how older adults spent their money found that only one category of spending was linked to happiness: leisure purchases, such as travel, movies, and encouragement at events. sportsmen.
One of the reasons is that we adapt more slowly to the purchases of experiences than to the purchases of material goods.
So the next time you’re torn between buying festival tickets or buying the latest gadget, grab your scratched smartphone and pre-purchase festival tickets for you and your friends.
This article first appeared in The Conversation
Adrian R. Camilleri is Senior Lecturer in Marketing, University of Technology Sydney