Rachel – Day 98

23 May

The News: Reasons You Overspend.

1. Studies have shown consumers will willingly spend more when their form of payment is with a card rather than with cash

2. Music encourages spending: Impulse purchases occur more frequently when classical or instrumental music is playing; in a restaurant, people eat faster when there is loud music (making you eat more and also shuffling you out sooner so another person can take your seat and spend money fast).

3. Buying in bulk can lead to overspending because when you have more of the product at your house, you go through it more liberally and quicker leading you to buy more. Also, even though the bulk items may cost less per unit, you end up spending more of you lump money alloted and can get yourself in financial trouble when your intent was to save.

4. Dieting: when you are left desiring something like food, you are more likely to spend money on other things in an attempt to satisfy what you are sacrificing while you diet.

5. Keeping track of every last penny. Studies have shown those most rigid with their budgets spend up to 19% more than those who are not. As the budgeter walks through the grocery store, they are estimating in their mind the cost of each item and adding it all together. Generally, the shopper tends to underestimate the cost of the items and then ends up spending more because they have underestimated.

6. Clearance. People overspend because they shop clearance. It’s proven that consumers will purchase a lot more things they never intended to purchase just because it’s on sale. This can end up costing you a lot more when you think you’re saving. You probably don’t need a 8th tank top even if it is only $3.

7. Shopping without a list: If you don’t have a shopping list with you, you impulse buy more often, you get things you think you need but you many not actually need. You forget what you need so you buy things just in case you need them and end up spending way too much.

8. Falling for Pricing Schemes. This is when a marketer will hugely overprice one item that you will never consider buying and then overprice another item by a much smaller scale and then you think to yourself, that’s a good deal, the other item was outrageous, but this one is pretty good. For example, you want a soda and the Mountain Dew cost $8 for a can but the Dr. Pepper only cost $4, what a steal right? Here is where the $4 soda looks like a good deal but you are still largely overpaying.

(http://financiallyfit.yahoo.com/finance/article-109621-5310-1-8-ways-youre-overspending-without-realizing-it?ywaad=ad0035)

My Comments: Suggestions:

1. Get on a cash only budget. Only pay with cash. (Sound like Dave Ramsey anyone?)

2. Try to be attentive to music where ever you go so you don’t get sucked into the scheme. If you here classical in a department store, remind yourself to stay in control. If it’s loud music in a restaurant, consider another place to dine out or do a to-go order.

3. Only buy what you need. Try to use coupons on the items you have on your list (don’t buy something just because you have a coupon for it).

4. I’m a huge believer in NOT dieting. Try a lifestyle change, not a temporary eating alteration. This means, you choose to eat what your body needs always and you choose to exercise and be active regularly. This is a change to the way you live life, not a diet plan. Then, stop thinking about your food so much. Focus on the moment you are in with the people you are around and only eat when you are hungry and when you do that, only eat until you are satisfied, not until you are lethargic and can’t move.

5. Make a shopping list and bring cash only to purchase, you won’t overspend this way.

6. Only buy on sale or clearance when it is something you were needing to get anyways (if it’s on your list).

7. Make yourself write a list of what you need and only get what’s on that list.

8. Educate yourself and show restraint. If you know what price an item should be, compare that to the item that’s being schemed. Likely if the price is that high it’s because it’s at a location where the competitive item is nowhere near — try to show restraint and wait until you get to a place where you can purchase that product for the price it should be.

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