Why we buy: how to avoid unnecessary spending
Well, they spent again too much! We scold yourself for spontaneous purchases and unreasonable investments. Where does the inability come from to manage money? It turns out that hasty financial decisions are guided by cognitive distortions. Psychologist Jeremy Dean tells how to figure them out to avoid unnecessary spending.
We all sometimes conduct themselves with finances thoughtlessly, and some are almost always. But many mistakes can be prevented, if you figure out how we think about money. Psychological research revealed 10 distortion that affect our solutions.
1. Striving for constancy
One of the main reasons for financial failures is the strength of habit. People are tied to what they have already tried, as if not noticing others, the best options. We tend to choose the same thing. And continue to use the same goods or services, despite all alternatives.
This tendency has long confirmed the study of investment solutions. People retain loyalty to the same pension programs, shares and bonds, even if more attractive offers are available on the market.
It is not easy to change the old glances, because it requires certain efforts. And we are afraid to regret the decision. But you can see the benefit, only dropping the shores.
2. Excuse after shopping
After unreasonable purchase, we convince yourself what they did. Most people refuse to recognize mistakes – especially this applies to expensive purchases. Marketers are trying to attract us for parts and use such moves as money back guarantee. It is worth only to agree, as we already prove to ourselves that they did right and begin to be very cited by the acquired subject, because now it is our property.
Fight it! If the goods or services are low-quality, or simply not needed, give up them. The legislation of most countries provides for a return period – do not justify the purchase, return it!
3. Trap comparison
We always compare prices, and business knows about it. Therefore, the recommended retail prices are raised, they are lowered. Some expensive positions in the restaurant menu are entered only in order to comply with them the cost of other dishes looked reasonably.
The trap of comparisons is also called an anchor effect. Certain price is fixed in our mind. Getting to this trick easy, but also bypassing it is also easily due to thoughtful comparison, which is not a restaurant at all.
Use price comparison sites. Try to compare different categories of goods. New iPad is really more important than a month of nutrition, or three years of campaigns in the cinema, or complete wardrobe?
4. Effect of ownership
We really appreciate the things that we own. For example, when you have to sell all the trash, it pulls the elevated price.
That is why we are sometimes found used products at quite wild prices. Unlike professionals, lovers sellers can no longer overcome emotional attachment to their property.