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4 Ways Your Mind Can Trick You into Overspending & How to Stop

, by Rob Kaufman

You're shopping online or in the mall and there it is the high-tech TV you've been hearing about... the pair of shoes you've always wanted... the cellphone that's finally on sale.

What do you do?

Do you splurge, destroy your budget and bring home your dream gadget or clothing item? Or do you think about your savings plan, hold back and walk by (or click past) without spending a dime?

According to a study in the Journal of Consumer Research, it all depends on how your mind works. The authors of the report said, "When faced with an opportunity to indulge, consumers may be motivated to distort their memories."

What does that mean, exactly? Well, if you come across that TV or pair of shoes mentioned above, your subconscious may trick you into believing you can afford it, even if you can't. That's because your memory may falsely remember spending less of your budget than you did.

Here are some more ways our minds work when thinking about splurging... or not...

  • People with poor impulse control most often twist their thinking in order to justify a future splurge or satisfying an immediate temptation. Yet when they consider a previous purchase, their memory of costs and budget are more accurate.

  • Self-disciplined shoppers deceive themselves also, but in a more helpful way. For instance, hardcore savers might convince themselves they spent more in the past than they did. This discourages them from splurging on the TV or shoes.

  • Non-impulsive people avoid overspending by telling themselves they overspent their budget. This motivates them to work harder toward their long-term goals.

  • People with high impulsivity (rash decision-makers) tend to have desires which cloud their thinking. So, for instance, although they might've spent their entire $100 budget last week, they'll remember spending less than that so they can buy their dream TV that's currently on sale.  

Money rationalization (allowing yourself to make a purchase you don't need or can't afford), happens to just about everyone - especially during the holiday season!

Unfortunately, it happens to some people more than others. If you find you're one of those people, here are some pointers to help you out...

  1. Don't worry about "keeping up with the Joneses" . It's often easier to spend money when everyone around you is doing it. If this happens to you, might be better to shop alone than with friends.

  2. The future is now . Do you hear yourself trying to rationalize a purchase by saying you'll start your budget "later"? Stopping yourself from overspending now will make you a better saver tomorrow.

  3. Sometimes you might feel you deserve a reward of sorts because you've been through a rough period or did something good for someone. Sure, that might be true. However, you really deserve a strategic budget that will help you not stress about money. Which is more important? A new pair of jeans or less stress in your life? The choice is yours.

  4. Don't fall for the "sale" sign . It doesn't matter how great the bargain if you can't afford it, you're overtaxing your budget. If you're tempted by an item that's on sale, let it go for a day, or two, or three. If it's still just as important to you, then perhaps you should buy it. It's the impulse buy that usually gets us in trouble, not the ones we carefully consider.

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Rob Kaufman

Rob is a writer... of blogs, books and business. His financial investment experience combined with a long background in marketing credit protection services provides a source of information that helps fill the gaps on one's journey toward financial well-being. His goal is simple: The more people he can help, the better.