As inflation continues to strain many household budgets, shoppers may be looking for ways to make the most of every dollar.
But one common shopping habit, even when it seems like it’s helping you save money, can quietly sabotage your efforts.
This behavior is sometimes called “thrifting,” short for “spending to save,” and occurs when you buy more items to qualify for free shipping, stock up on items you don’t need because they’re on sale, or spend more to take advantage of a bigger discount.
Instead of reducing your spending, these promotions can encourage you to buy more than you planned, leaving you in an even worse situation than if you simply stuck to your shopping list.
“Consumers will then focus on what they save, not what they spend,” says Dr. Charles Chaffin, a professor at Iowa State University and CEO of the financial psychology firm Money & Risk Inventory.
“The goal changes from being a pragmatic consumer to ‘winning’ in transactions.”
This change, he says, is no coincidence. Retailers are very good at redirecting your attention from what you were about to buy to the transaction itself.
Why bargains feel good
Several well-known psychological biases can make it difficult to resist a promotion, Chaffin says.
Loss aversion: People tend to perceive losses more strongly than equivalent gains. That’s why, he says, even if you weren’t planning on buying the product in the first place, a limited-time sale can make you feel like you’re missing out on the savings by dropping it. ‘Payment pain’: Promotions that encourage shoppers to save can reduce what psychologists call ‘payment pain’ – the discomfort people feel when spending money. Instead of focusing on the extra $30 spent, shoppers focus on the $10 they saved. Anchoring: Retailers often display a reduced “original” price next to the sale price, making the discount seem more valuable than it otherwise would be.
Urgency also plays an important role. Limited-time offers, countdown clocks, and one-day sales encourage instant decisions and spend less time considering whether a purchase actually fits your budget and long-term goals. Chaffin says this makes for effective marketing because people are “hardwired” to prefer immediate gratification over future rewards.
Overall, he says, these forces can “hijack” the decision-making process, shifting the focus from whether a product is needed to whether it’s a good deal.
How to tell if you’re actually saving money
Not all discounts are bad financial decisions. For example, if you already plan on buying the item and know you’ll use it all, you can save money by buying in bulk at Costco, says Mark Sanaiha, a certified financial planner and founder of McAllen Capital.
But “if you’re making a purchase that didn’t exist before, that’s not a discount, it’s a new expense,” he says.
Before spending more money to unlock promotions, Sanaiha recommends asking yourself a few simple questions.
Did you already want this before you saw the deal? Will you actually use it in the near future? Are you buying to save money or just because you feel like you got a good deal?
If the answer to these questions is no, he says the promotion may be driving more purchases than the actual need.
Chaffin’s favorite question is even simpler. Would you buy this if there was no promotion?
“If it’s on your shopping list, you’ll get a discount,” he says. “If it’s not on the list, you’re spending more money than if it wasn’t.”
To give yourself time to ask the right questions, Chaffin recommends creating a little “friction” before you spend money. The goal is simply to slow down long enough to decide if you actually need to buy. You can do this by shopping with a handwritten list, removing saved credit card information from retail websites, and reminding yourself of your long-term financial goals before heading to the checkout.
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