3 ways to control your spending in 2014

Science has thrown up some fascinating facts about how the brain operates when we're in consumer mode, and the processes at work when people over-spend. 

Apply some science to control your spending

There are three main factors at work - and to watch out for - if you want to keep spending under control in 2014:

1. Biological Factors: Don’t go shopping if you’re hungry, pre-menstrual or have just emptied your bladder.

You may not realise that your physiology is affecting your behaviour. But when you're hungry you will buy more food and make higher calorific choices at the supermarket. When in an anxious state you will be more likely to impulse-buy. That's because the physical state of high arousal leads to a depletion of the resources that govern self-control. And fluctuations in activity in the brain’s orbitofrontal cortex during the menstrual cycle will make you more likely to go on a spending spree when premenstrual. And more rational and controlled post-ovulation. Even an empty bladder affects your brain’s control mechanisms. Science has shown you’ll be more likely to (sorry) splash out if you’ve just spent a penny. So pay attention to your body before hitting the shops, it may be telling you to hold fire.

Try timing shopping trips with your menstrual cycle and avoid the pre-menstrual phase

2. Emotional factors: Don’t shop if you’ve just had a row, a stressful day or been dumped by your boyfriend.

People experience a range of emotions (anger, fear, sadness) in their daily lives and engage in all sorts of behavioural responses to keep them in check.  Some women find shopping gives them an emotional outlet, the way that alcohol or drugs can do for others. It distracts them from negative feelings and provides comfort in the form of a treat or reward. In fact studies of compulsive buying have shown that its prime function is to repair mood. So spot when emotions are running high and find an alternative way of releasing them. Find  distraction through exercise or relaxation, or seek social support by spending time with friends. Concentration, whether on gardening, painting or rock-climbing, is also a good way to absorb negative emotions. And the Do Something Different approach to behavioural change could help see you through the tough times because it's all about about breaking habits and increasing behavioural flexibility.

Buyer's remorse is like a shopping hangover

3. Cognitive factors: Don’t go shopping with low self-esteem and an “I deserve it attitude”.

Impulse purchases can trigger a lot of self-justification in the consumer, to assuage the guilt of over-spending. Their thoughts echo with the messages that have been implanted by constant brain-washing and bombarding marketing campaigns. Thoughts such as “Why shouldn’t I have it?” “I work hard I deserve it” “My friends will love me for it” and so on. Self-talk can also shift the focus onto the wrong things, “I’m saving £100 by buying this in the sale” (instead of, “I’m spending £200 I don’t have") or even "I'll show him!" Some cognitive reframing can help here. Relabel your credit card your debt card. Silently answer the ad-men back. Recall when you last had buyer’s remorse and tell yourself how you’ll feel tomorrow. And find ways to boost your self-esteem so that you can resist the constant bombardment of persuasive messages. 
Few people greet a large credit card bill with the words, “Because I’m worth it”.

Moments of Weakness: Five Impulse Spending Triggers

Do you know what your weak spot is? Is it the shoe section in Harvey Nicks or those racks of beauty products at the airport? Do you buy more food when you're hungry (who doesn't)? More clothes when you're stressed? More gifts when feeling guilty? More of anything-that-isn't-nailed-down when you're pre-menstrual and have just been paid?

People rarely buy stuff for utilitarian reasons. Buying is more often the result of mind-boggling marketing tricks, seductive store layouts and a whole host of biological, psychological and even evolutionary factors.  

Purchasing decisions aren't always made rationally

We aren't always in as much control as we'd like to be, as the growing number of people with credit card debts or compulsive shopping disorders will testify. And men and women shop differently, with more women inclined to spend on impulse.

Impulse buys are a buyer's curse and a seller's dream. 

A recent article on the excellent Huffington Post website has captured the Five Big Moments When You're Most Likely to Overspend. 

According to their writer Candace Braun, those moments of weakness are when:

You're Mindful of The Time:  A slogan that urged people to "spend a little time, enjoy C&D's lemonade," resulted in more people buying a drink, and paying 51% more for it (compared to a those who saw a sign that asked them to "spend a little money"). This 2008 study from Stanford University showed that  'spending time' feels more like buying an experience, not just handing over hard-earned cash. Slogans linked to time, like 'thank Crunchie it's Friday' work in the same way.

If the time seems right.....

You're Trying to Avoid The Crowds: You may feel super-organised shopping at 7 a.m. on a Wednesday, when Tesco is blissfully quiet, but your purse could take a bigger hit.  Being in a crowd makes us less likely to overspend, according to a Journal of Consumer Research study. We are more focused on getting out unscathed than on making another purchase.

I know you didn't come out to buy this, but here you are!

You've Got Money in Another Account: That offer of the £100 bonus for opening an extra account seems a no-brainer. However, a May 2013 study found that people tend to save more when they have just one place to deposit money.  Researchers say that with one account it's easier to keep track of how much is in there -- and how much you're spending. When we have multiple accounts, it's easy to spend from one while feeling reassured there's money in the other account too.

You've Got to Buy Something Embarrassing: To try and mask the embarrassing item in their basket, almost 80 percent of people will pile in unnecessary extras to divert the cashier's and other shoppers' attention, a Journal of Consumer Research study found. Online shopping could be the answer here!

Gift purchases are less guilt-ridden

You Need Some Retail Therapy: It's common to feel the urge to splurge when emotions are high or mood is low. My research has also shown that 75 percent of women are more likely to overspend or impulse buy when treating someone else. Feeling low can lead to us literally trying to buy happiness and buying gifts for those we care about can help us feel more connected to them, as we say in Sheconomics. Of course, buying for someone else doesn't induce as much guilt either when money is tight.

Thanks again to the Huffington Post for bringing these spending triggers to light, and for including Sheconomics in their article - it's always nice to reach out to our US readers - issues with money cross cultural boundaries and oceans too.

On touching and being touched

“Just hold it,” I heard the man in the Apple shop say to the young executive who had been gazing longingly at the new iPad.

"Don’t touch it"  I wanted to say, "unless you really want to take it home with you."

Touching an object increases our desire for it.

Luckily I can hold back in these situations. I could get banned from so many shops otherwise. I wanted to warn the guy against touching because research shows that when we touch an object we’re more likely to buy it. 

In fact, once we’ve touched it we’ll pay more for it. 

If it feels nice that is. And, let’s face it, Apple products feel nice. Someone once described them to me as ‘lickable’. But going around licking stuff in shops would get us banned, so maybe holding them is the next best pleasure.

Touching increases sense of ownership

You see we’re used to touching stuff that we own. So, when we touch something in a shop, our sense of ownership is increased. And since we prefer the stuff that we own to other stuff, we’re prepared to pay more for it. No wonder so much impulse buying goes on.

An eminent media coach once told me to get my audience to pass a copy of my book to the person at the far back of the room. “Then everyone who’s touched it will want it,” he said. I've never tested that one out (just in case it got passed right back to me).

Touching changes the brain’s responses

Our sense of touch is so fundamental that we like to have it stimulated when we’re feeling a bit low. When young mammals are sick or lost, the brain tries to replenish them by making them more sensitive to touch. Then they enjoy a hug more and can re-bond quickly. It’s the same with consumers. Not that they are injured or have lost their mums, but if they feel a bit depressed their responsivity to the tactile aspects of goods is increased. So if you shop when you feel depressed, and touch a lot of stuff, don’t be surprised if your credit card feels the pain.

The brain changes in response to touch

Strangers: Hands off

We may like touching stuff in shops but we sure don’t want to rub shoulders with other customers. Research shows that even being brushed by a fellow shopper makes consumers more likely to head for the exit. Dr Brett Martin actually did an experiment to test this, half the consumers were brushed against while looking at a product, half weren’t (I know, us psychologists have all the fun). The  touched-ones left the store quicker and reported more negative feelings towards the brand afterwards, than those left ‘untouched’. So a store with narrow aisles crammed with goods is not making it easy for their customers to buy.

Touched babies say No to drugs

OK you might find the stuff about shopping and touching a bit trivial. But did you know that babies who get more cuddles are more able to resist drugs as adults?

Cuddle me cuddle my brain

This was first shown in studies with rats. Mother rats who were more nurturing and attentive produced specific changes in the immune responses in the brains of their pups, leaving them more able to resist the temptation of a dose of morphine later in life. So not only does a mother’s touch actually change brain functioning, scientists now think it’s also protective against later drug abuse.  

The psychology of shopping: how men and women shop

(SPONSORED POST)

Did you know that every time you step into a shop, there are a million and one things that are designed to make you part with your cash? 

Have you ever popped to the shops to buy milk and come home with a bag full of shopping?

 It's annoying how they place the milk at the back of the shop, isn't it!

An international bestselling book 'Why We Buy - The Science of Shopping' gives an insight into some of the ways retailers use psychology to make people buy more, and it seems that men and women are targeted in very different ways.

Its author, Paco Underhill, has spent years observing shoppers in retail environments. If you want to shop smarter, you might be interested by some of the book's insights.

First of all, not everybody who walks into a shop knows whether they will buy anything. 60 to 70% of purchases in supermarkets are 'unplanned'. A store's success depends on how many shoppers it can convert into buyers.

Frugal tip: Don't go shopping unless you need something

Merchandise, where products are placed on the shelf (eye line products sell the most) the smells and lights, the blast of warm air as you enter the shop, the layout of the aisles: it can all determine whether you buy - and lead you towards a product you never even knew you wanted.

Targeting Women

Mr Underhill says shopping environments are geared towards women, as women generally choose most of the purchases, including mundane things like groceries.

Family-friendly shops have wide aisles for prams and push-chairs, some provide crèches or children's play areas and special parking spaces for mums. These shops want to attract the 'decision makers'.

Cosmetics and toiletries are generally a woman's domain and women like to take their time to read the packaging before they buy. In one study, 63% of women who bought something in a chemist read the packaging. So you'll find that the cosmetics aisle is usually secluded and private to give them time - so they'll buy more! In department stores, greater pressure tactics are used - most of the beauty products don't have price tags, and women feel embarrassed to ask the lady behind the counter how much something costs, and end up buying it anyway.

Frugal tip: Don't be embarrassed to ask how much an unlabelled item costs before you buy it.

Targeting men

According to Mr Underhill, 65% of men they observed who tried on an item of clothing bought it, whereas only 25% of women did so. Women enjoy the experience of trying different clothes on, whereas men seem to find it stressful. Retailers try to make the men's changing rooms easy to find - as they're likely to get a higher conversion rate.

Frugal tip: Men - if you try on an item of clothing - you're statistically more likely to buy it.

86% of women look at price tags, whereas only 72% of men do. While Mr Underhill believes that men ignore price tags to 'prove their virility' - what it really means is that retailers find it easier to upgrade men to more expensive products, whereas women are more cautious.

Frugal tip: Look at the price tag before you buy and decide whether you really need it.

It's interesting to see how retailers use the psychology of shopping to make us spend more - they're well aware of how we will behave in certain conditions. Next time you're out shopping, think about whether the purchasing decision you make is one you came to by yourself, or whether someone pushed you along a little bit. You may be surprised!

This article was provided by Lucy Bower from thinkmoney.co.uk, where she's been writing frugal tips for almost a year now, and is thoroughly enjoying the frugal lifestyle because of it!

Why you shouldn't shop on an empty stomach... or an empty bladder.

You probably know it's not wise to go shopping on an empty stomach. 

That's because your brain will be awash with hunger signals that will steer you towards the nearest cake counter. 

But now psychologists have discovered you shouldn't go shopping an an empty bladder either.

The reason for this comes from the finding that, when the bladder is full, people in experiments made spending decisions that were less rash. 

“You seem to make better decisions when you have a full bladder,” said Dr Mirjam Tuk of the University of Twente in the Netherlands, who came up with the idea for the study after sitting through a long lecture (presumably cross-legged). The same parts of the brain that control the bladder are also responsible for the control of desire and reward. So when you can control the urge to wee you will also activate the neurological links that control the urge to - er - splash out in the shops. Financially speaking that is.

Dr. Tuk suggests drinking a bottle of water before making a decision about your stock portfolio. And she says shops that want to encourage impulse buys should have customer loos, because shoppers might opt for more expensive products when they have an empty bladder.

In Sheconomics we say that delaying tactics are a good way to avoid making an impulsive purchase. One of these is to leave a purchase at the till and go back for it later. Maybe go for a walk and see if it's still such a desirable purchase by the time you get back. According to this research, a detour to the loo might also be advisable!

Note to self: Make a list

Are you a list-lover? 

My life seems to be organised around a scattering of post-it notes reminding me of what I have to do, get or even think about. 

I love the sense of control that writing a list gives me. And the euphoria of sheer smugness I feel every time I tick something off.

So I was intrigued to read that writing a shopping list can save me £520 per year. Of course that assumes I take the list to the supermarket with me (or slavishly follow it when placing my online grocery order) and make a concerted effort not to go ‘off-list’ when tempting offers pop up on my radar.

The £520 a year saving statistic comes from the Tesco Greener Living campaign website. It shows you how much money you can save by going greener, including:

• An estimated £365 a year if your home is well insulated
• £30 a year if you remember NOT to leave appliances on stand-by
• £55 a year if you turn your heating thermostst down by just 1degree C
• £200 from recycling your old mobile phone with Tesco 

Have a go at Tesco’s online quiz and test your own green money-saving credentials. 

Or at least put it on your list as something you should get round to.

P.S. Making a list is just one way to help you keep to a budget. If you need more tips download our Tip Sheet "How to Curb the Urge to Splurge" here.

Is this why many people who plan to save fail?

We’re always told to make our goals concrete but, according to new research, the best savers make abstract plans. The researchers say it’s better to focus on the ‘why’ question of saving, rather than the ‘how’, because people who focus on concrete aspects of their goals fail to spot other opportunities to save money.

"Imagine a person who has a goal to save money. The person forms a plan to purchase fewer clothing items at the mall," say the authors of the study in the Journal of Consumer Research. "Would the person also be more likely to order a cheaper meal at a restaurant, avoid making an impulse purchase, or combine errands to save money on gas?"

The authors conducted four experiments. In one, people were asked to list a specific plan to save, whereas others were not asked to plan. Then some people were asked to focus on why they wanted to save money. Subsequently, all participants were given the opportunity to buy candy. The goal-setters weren’t so good at resisting the urge to splurge on candy.

"Planning is more effective when people think abstractly, keep an open mind, and remind themselves of why they want to achieve a goal," the authors write. "This strategy is especially effective when the plan turns out to be unfeasible (cheaper restaurant is too far away, gym is closed today for a holiday) or when other goal-directed activities become available (walk instead of taking a cab, eat a healthier meal)."


University of Chicago Press Journals (2010, May 19). Asking 'why' instead of 'how' helps consumers achieve goals of saving money or losing weight. ScienceDaily. Retrieved June 10, 2010, from http://www.sciencedaily.com/releases/2010/05/100518113136.htm

The one thing you need to teach your kids

As a child psychologist, I meet mums who tell me their kids have all the latest toys and gadgets yet never seem satisfied.

I also see worn-down teachers in despair at the rising number of pupils with attention problems.

And when I look at the psychology of money, impulsivity and short-termism seem to underpin most financial disasters.

So here’s the one thing you need to teach your kids.

Teach them to wait. To delay gratification. To resist impulse.

Mimic the marshmallow-waving psychologist Mischel - tell them they can have one sweet now, or two if they wait five minutes. Or the whole packet if they wait a week.

Buy now, pay later. Click to purchase. Surf 120 channels. Express delivery. Free upgrade. Loans by phone.

The wholesale commercialization of our society has seduced us into gratifying our impulses immediately. With easy credit, being skint needn’t stop us having what we want now.

And the 24/7 internet means we don’t even have to wait for the shops to open to feed our greed.

Research shows that adults who can transcend impulsive urges are more likely to be high achievers. They’re the ones who’ll ride the ups and downs of the stock market instead of over-reacting to every blip. They’ll be the slow-burners, the savers with long-term plans and flourishing investments, quietly gloating over the live-it-up splurgers. And with kids, as Mischel found, those who can sit it out for the two sweets turn out to have higher IQs.

So I’m convinced that if you nurture children’s ability to delay gratification, they’ll do better in all walks of life.

What’s the length of your fingers got to do with your money?

Hold your hand out, palm facing towards you.

Now compare the length of your index finger and your ring finger. Which is longer?

In men the ring finger is usually longer.
In women they’re usually about the same length.

Scientists say the amount of testosterone we’re exposed to in the womb affects the growth of the ring finger. So the male has a larger ring finger.

But, of course, females get exposed to testosterone too and some have a longer ring finger (I’m one of those).

(Psychologists are a weeny bit obsessed with fingers at the moment - a colleague of mine literally whooped with joy when his finger-measuring callipers arrived in the post).

Now researchers from the USA* have found that females who have a more male-like finger ratio (a longer ring finger, called the 2D:4D ratio) are more likely to be financially impulsive.

They tested delay-discounting ability in men and women.

Delay discounting is opting for a smaller reward now rather than waiting for a larger reward.

So for example, you might prefer £10 now to £11 next month.

But would you turn down £10 now in favour of £100 next month?

Most people would. Where they differ is in the ‘tipping point’ at which they switch from taking the reward now to opting to wait (in the example above, somewhere between £11 and £100). This is known as the k value.

The psychologist Mischel first tested delaying gratification with children, offering them one marshmallow now or two if they could wait 5 minutes. Some kids just couldn’t wait. They wanted their gratification instantly.

Money decisions can be the same. Lots of us would rather spend our money now than put it away to earn interest. Even though the delay would stash us more cash in the long run. Delay discounting is what separates spenders from savers. And this new research suggests, in women, a sneaky look at the ring finger might be very revealing.

*Lucas, M. & Koff, E. (2010) Delay discounting is associated with the 2D:4D ratio in women but not men. Personality and Individual Differences, 48, 2, 182-186.