1. © 2009 BALANCE The Psychology of Spending

2. Spending Choices Many factors impact consumer behavior These factors may lead to decisions that are not in our best interest Understanding why we buy what we buy can help us make smart decisions in the future

3. Self-Evaluation What types of products and services do you enjoy spending money on? Why do you think you enjoy spending money on them? In what ways do you think you are a “good” spender? What spending habits would you like to change? How do you think you can change them?

4. The Role of Advertising The purpose of advertising is to get us to buy Use emotional appeals and present certain images or lifestyles Can affect consumer behavior, often unconsciously You cannot avoid advertising, but you can separate emotional appeals from the true value of the product

5. Keeping Up with the Joneses Owning makes us feel successful Do not want to have less than other people But there will always be people with more Buying luxuries is not bad, but focus on what you can afford, not what others have

6. Spending Habits We make certain spending decisions and stick with them out of habit Coffee Lunches out Brand loyalty Examine if your habits are affordable Track spending If spending more than earning, honestly assess what can be cut Determine if needs are real or perceived

7. Impulse Buying We do it, even though we know we shouldn’t, because it is exciting and enticing Stores encourage it To prevent impulse buying, keep your shopping focused Create a list Avoid browsing, taking free samples, trying on clothes just to see how they look, and talking to salespeople unless necessary Shop alone

8. Bargain Hunting People love buying things on sale Smart shoppers look for sales on items they were already planning to buy But you are not saving money if you buy something just because it is on sale Focus on cost, not just savings Best bargain is to not buy

9. Retail Therapy Many people shop when they are depressed to cheer themselves up Spending can provide temporary happiness, but you usually feel worse later Instead of shopping, engage in mood- boosting activities that are free If needed, seek professional help

10. Money as Love We often try to show our love by spending money, but you can’t buy love Address problems head-on instead of shelling out cash to try to fix them Thoughtful gifts usually preferred over expensive ones Can do something nice for free Giving money to friends and family members can do more harm than good

11. Spending vs. Saving We often put immediate desires instead of important future needs Instant gratification more appealing than delayed gratification Saving often delayed Prioritize saving today Have some of paycheck directly deposited into savings account The sooner you start saving, the more money you will have

12. The Role of Credit People spend more when they use credit Credit allows you to get something today without having to pay for it If you charge too much and cannot pay off balance in full, you will have to pay interest Use a debit card or cash for most purchases Make- and pay off- a small purchase each month with a credit card

13. Be a Conscious Consumer Ask yourself Will I really use the product or service? What are my motives for making the purchase? Do I own anything else that provides the same use? Did I feel a need for this item before I saw it in the store? What are the financial and emotional costs of the purchase, and can I really afford it? Can I get the product or service for less elsewhere?