Everyone loves a bargain, and there are often quite a few to be had throughout the year. But in the rush of trying to snap up a great deal we can make some pretty swift decisions.
Most of us know the sinking feeling that comes when we realise we’re already over an outfit before we’ve taken it out of the bag.
Financial expert Nicole Pedersen-McKinnon says the current cost of living has enhanced our thirst for a better deal.
“The hip pocket pain is acute around the country, and we’re seeing people adopt this bargain-seeking mentality, which makes perfect sense. They’re not necessarily spending less, but they’re looking for that advantage.”
If you know where to look, there are genuine savings to be made – but beware the pitfalls.
“The goal of marketing is extracting your money and getting people to purchase,” psychologist Sandy Rea says. “So the way to rebut that is to have your own safeguards in place.”
THE SCIENCE OF SPENDING
As much as we enjoy bringing home nice things, science says that isn’t the only reason why we love shopping.
The very act of purchasing something can also deliver a heady thrill, regardless of whether it’s something you ultimately want or need.
“What the research is telling us is that we get a dopamine effect,” Sandy explains. “Dopamine is a hormone that is also associated with thrill-seeking and sex, so it’s very rewarding.”
Although the financial crisis has hit some retailers hard, others have witnessed strong sales in “feel-good” categories like cosmetics, fragrance, chocolate, cushions and candles.
Many commentators put this down to the “lipstick effect” – a popular notion that we’re actually more likely to splurge on little luxuries when times get tough.
If something is on sale, Sandy says it only enhances the buzz. “What happens is we get a nice little hit,” she explains. “We go, ‘Oh, there’s a red sticker, fabulous!’”
EMOTIONAL SHOPPING
While there’s nothing wrong with splashing out on a few affordable tubes of lippy, even small buys can add up quickly if you take them to excess.
In fact, around 96 per cent of Aussies are familiar with bargain regret, according to research by AAMI. Rea says some people turn to shopping as a way to cope when they’re under pressure – which can be especially problematic if money was causing their issues in the first place.
“With a lot of these small purchases, it really does serve as a form of soothing for some of the stress in our life,” she says.
“When you get something delivered to your door it’s like a present. But guess what? It’s a present that you have to pay for.”
With so many economic factors swirling outside our control, we can also resent having to make sacrifices that seem unfair.
“A number of people don’t like restrictions,” Sandy adds. “[They’ll say] ‘Don’t tell me I can’t have that second pair of shoes or product that I really want.’”
BEWARE FALSE BARGAINS
At a time when we’re all trying to shave off costs, it’s important to avoid decisions that could cost you in the long run.
For instance, if you’re trying to cut costs on insurance, make sure you read the fine print so you know you’ll still be covered if life takes an unexpected turn.
“Cheap policies can be far from cheerful, because it might be that they have a list of exclusions as long as your arm,” Nicole says.
“The chances are that the insurance will be a complete waste of money. And that’s the last thing you want.”
If you’re trying to cut extras, Nicole says look for things that you genuinely know you won’t need.
“For example, if kids are out of the question, obstetric and gynaecological services is not something that you need to pay for any more,” she explains.
HOW TO BE A SAVVY SAVER
As much as you might not want to, Nicole says it’s time to bite the bullet and take a line-by-line forensic analysis of your finances. She also recommends visiting moneysmart.gov.au, which offers tools and other resources, including free financial counselling if needed.
Next, it’s time to remind ourselves why we’re trying to save in the first place. “All of us need strong motivation to resist instant gratification,” she explains.
“Because why else wouldn’t we simply spend everything we earn? Particularly when what’s left at the moment is not much because we’re being squeezed from every direction. It’s about setting those goals for your money that are so sweet, you can almost taste them.”
If you’re trapped in a vicious spending cycle, Sandy recommends seeing a mental health professional. This is especially important in the case of compulsive shopping, which has been correlated to depression.
“My absolute advice for people who are caught in a financial cycle is to get some professional help,” she says.
