There’s two kinds of people in the world, those who like to party and those who don’t like to party!!!
But seriously though, who doesn’t enjoy a fun celebration from time to time?! The biggest celebration for most people throughout the year is Christmas, with all of the festive gatherings, dinners, and of course gifts!!! The trouble with it all is that it can leave you on the high and dry for months after trying to recoup from what you spent all throughout December.
In an effort to curb some unnecessary spending and stay true to your budget for the month, it’s important to note the behavior around spending during this time of the year (and can be applicable throughout the entire year as well).
Do you ever notice that most people love talking about getting a deal when they go shopping? Nobody ever likes to admit that they overpaid for something! Why is that? Is it actually because companies are all honest and they actually sell all of their merchandise for a fair price? Are there actually deals to be had???
We’re so often attracted to signs advertising 50% off, “Buy One Get One Free”, “Final Sale”, and so on. What doesn’t usually register with us is that this retailer is usually drawing attention to get you into the store, and steer you towards higher margin (high profit) goods, where they can afford to discount in an effort to entice the shopper into believing that they’re getting “rock bottom” pricing!
For example: Say a retail store is advertising a massive blowout sale for a pair of shoes on sale for half off! The shoes are now on sale for the low low price of only $60 (for a limited time), when the regular price is $120!!! Good deal right? It would appear that the retailer is losing a tidy profit on these shoes, but in fact what we don’t realize is that the shoes cost the retailer only $50 and they’re still making a 20% profit ($10/pair), which by most industry’s standards is a substantial gain!
Now most of you will ask, what’s the big deal??!!!
This is where the psychology comes into play. 99% of you will likely argue that you just saved yourself $60!!! Whereas the other 1% sees the sale as a bid for us to part with $60 of our hard earned money that we otherwise wouldn’t not have to spend (AND our existing collection of shoes is just FINE!)! It’s not about saving $60, because we’re not in fact saving anything if we’ve committed to spending on a pair of shoes. The fact is that the shoes cost us $60, which is the financial committed we’re making regardless of perceived savings! Make sense?? Add all these purchases up over the course of the month (or year), and you’ve got yourself a pretty hefty dent to your budget! This can be the difference between financial independence and struggle!!
Retailers have mastered the art of making us think that we’ve saved money (while spending it). There’s no argument that the shoes indeed have value, but to what extent? Many people who don’t need the shoes, will feel compelled to buy them out of this sense of savings. This behavior translates into many other areas of our lives where we often purchase and consume goods or services that really offer us no additional value, but feel good at the time, or trick us into thinking we got a good deal!
It’s nature for everyone to want to buy something for less. Why pay full price when you can get it for half, right?! The trick is to only buy what you need when you need it! Sometimes, that means that you’re actually willing and able to pay full price because you’re not making a bunch of unnecessary purchases throughout the year, and you still come ahead in the end!
All this doesn’t mean to say don’t go out there and spend money, but rather it’s to challenge you to be intentional with where your hard earned money goes! I’m currently battling a desire to upgrade my wrist watch. Two nicer watches of mine both died (ironically at the same time), and I have been wearing a $30 Timex Ironman for all occasions. It’s a great watch but maybe not the most practical for professional or formal attire, work functions, etc. But, it tells me the time just the same, and so far nobody has ridiculed me or chastised me!
As for this time of the year, regardless if you’re someone who likes to party or not, I wish you and your family a Merry Christmas and a prosperous and healthy New Year!!!
