Beware Of The Money Buzz

Feb 06, 2013 No Comments by

Your emotions can affect your spending decisions in unexpected ways. Read on for the tricks that will help you prevent your feelings from ruling your finances.

Sometimes your emotions torpedo your intellect. Weren’t you the one singing along to that Ke$ha song before you remembered you really don’t like Ke$ha? Or tearing up during the commercial you know is cheesy, where the father finally hands off the car keys to his teenage daughter? Happens to everyone, no big deal – but when your emotions run roughshod over your financial smarts, your wallet can get battered.

How we feel often tops us from being cold-hearted about cash. These scientific studies, however, can help you react more with your brain and less by your moods when it comes to money.

stop wasting your money

 

Sold to the Nicest Person!

The Lesson: You lose money when you insist that valuable objects go to buyers who plan to use them.

People want to sell beloved items to those who will cherish them. Marketing professors found that nine out of 10 people would pick bidders who planned to hang a painting they inherited from their grandparents or play the piano they adored as a child over potential buyers who wanted the objects only as investments. But by doing so, the seller lost money, the study found. To get an item into the hands of a person they thought would love it, they parted with it for hundreds of dollars less than another buyer offered.

Take Control: Before you place an ad for an object that has sentimental value, get an appraisal. “When you have a reference price, it usually has an effect on your judgment”. If the item isn’t expensive enough for a professional valuation, check out eBay and see how much similar items have sold for.

Open Hearts and Wallets

The Lesson: Shelling out for “special” occasions cost more than you think.

The last time a friend had a birthday, you sent big. After all, she has only one birthday a year, for which she deserves a nice present. But this sort of generosity can add up to out-of-control emptying of your checking account. People tend to overspend repeatedly on the kind of events that seem to come along rarely, such as birthdays. “They seem like one-off things,” “but when you put them all together, you’re really breaking the budget.”

Take Control: Write down how much you spend on each celebratory buy. “This turns your spending into something much more mechanical”. The budget line should be “gifts and entertainment, not “miscellaneous,” so that you’re tracking exactly where your money is going.

Purse Under Pressure

The Lesson: Stress makes you spend, even if you’re only anticipating it

Retail therapy has become a cliche: After awful days at work, people hit the mall – and feel better as soon as their hands are filled with shopping bags. But people may also be spurred to shop when they are merely dreading a nail – chewing situation. “You’ll do whatever it takes to make yourself feel better”.

Take Control: First, recognize the emotion – nervousness about a complex home-renovation project, say, or a conflicting work deadline has you in a stress spiral. Then calm yourself without swiping a credit card. exercising or mentally preparing yourself for the fretful situation (perhaps by writing down how to get everything done at home or the office) are good – and cheap – options.

Autopilot Shopping

The Lesson: Buying stuff online out of routine makes you miss savings.

Online shopping may save you money sometimes, but not if you’re stocking up on basics like groceries or beauty products. Found that because online supermarkets save your preferences – if you bought Fage yoghurt going to buy it again, the thinking goes – doing your shopping virtually also makes it easier to skip over items that are discounted (“Chobani is on sale!”).

Take Control: Rather than simply checking off items on your saved lists, click around the sites you shop regularly. For food shopping, that could mean looking for specials or for smaller or store brands.


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