If you’re like a lot of people, you set a spending limit at holiday time and promise yourself you’re not going to go over budget this year…and then you do. Here are some tips from Nancy Harhut that use social science to help you stay on budget this holiday season:
Tip #1 – Remember your brain plays tricks on you
Specifically when it comes to prices. When we see $25, we see a smaller price than when we see $25.00. Studies show the less space the price occupies, the less our brains perceive the cost to be. Additionally, research out of Clark University and UConn showed that consumers perceive sale prices written in smaller type to be a better value than when they’re written in a large, bold font.
Tip #2 – Before you go shopping, make a list of what you’ll buy
Social science researchers have found that when we write things down, we’re more likely to follow through on them. So having a list will help prevent impulse purchases. And for extra conviction, show that list to someone else. Once we’ve “gone public” with a commitment, we feel even more internal pressure to live up to it.
Tip #3 – Override your hardwired responses
As people, we have certain automatic, instinctive responses to things. For example, we avoid the pain of loss. This means we’re hardwired to respond to limited quantities and special sale prices so we don’t lose out. But once we’re aware of these reflex decisions, we can pause before making a purchase and assess if we really want to make it.
The other thing to be wary of is holiday deals that include something free. As best-selling author and neuroeconomist Dan Ariely explains, “Free! gives us such an emotional charge that we perceive what is being offered as immensely more valuable than it really is.” Which means we could end up buying an item that includes a free gift when we really don’t want or need the item to begin with.
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