Today I’m featuring a guest post from a personal finance blogger I recently came in contact with – Maggie Banks.
Maggie writes over at Northern Expenditure where she documents her journey with her family of five toward early retirement. She uses research to discuss how to make better financial decisions and how to save money and talks about life in Alaska.
Do yourself a few favors. After you read this post, make sure you head over to her blog to check out more of her writing – it’s fantastic. Once you’re done there, be sure to connect with Maggie on Twitter as well. Happy Friday, friends!
The opportunities to impulse purchase are nearly constant: drive-through coffee or hot chocolate on the way to work, the vending machine at the office, the sale you just got an email about, or the cool thing you see at the store on the way to the milk (there’s a reason they put the milk WAY back there).
So how to do you stop buying things and start saving instead?
How Marketers Think
As Chris has said, marketing can test even the best frugal minds. The way stores get you to buy things is by making them as physically present as possible. In the store, you see the item, you touch the item, so you can picture yourself owning that item very easily. All it would take is a few paces to the checkout and the swipe of a card and it would be yours.
Online, marketers try to mimic this idea as much as possible by creating urgency (one day sale!) and helping you visualize yourself with that item (look how fashionable you’ll be in your new dress on the beach! Just look at all the fabulous photos you will be able to take with your new camera!). Part of that visualizing involves you being someone you wish you were (a really good photographer having lovely beach vacations).
Our proximity to the item (either physically or mentally) impacts our decisions. This idea is called “Construal Level Theory.” The word “construal” or “to construe” means to interpret or mentally process things.
The theory is that you are someone that processes something very concretely or at a high level (you can feel the sand between your toes on that beach vacation), you’ll make different decisions than someone that construes at a lower level (the idea of a vacation somewhere at some point). A marketing study in the hotel industry verified this.
The study found that consumers that were planning a trip to a far-away destination in the distant future responded more to abstract marketing messages (ie: abstract ideas of visiting exotic, beachy places). And people who were planning a trip closer to home and sooner responded more to concrete promotional messages (“take a weekend road trip to _____ and stay at this hotel”).
How to Beat the Marketers
In order to stop the impulse purchases, you need to be ahead of the marketers. Here are a few steps to take to be in control:
Identify Specific Goals and Visualize them Concretely
Marketers know you probably want to save money and retire at some point, but they are counting on you only having vague ideas surrounding those things. Think about why you’re saving money in specific terms.
- Are you saving up for a camera?
- Which one?
- What is the first picture you’re going to take?
- Are you saving money for a trip to Paris?
- What do you plan to eat there?
- Where is the first place you want to go?
- Are you saving up to retire?
- What does that mean specifically for you?
- What will you do your first day of retirement?
- Where will you go?
- Who will you be with?
If you don’t have a very concrete idea about where you want that money to go, marketers spend loads of their own money trying to create those concrete ideas for you.
Focus on the Goal, Not the Process
A study about savings rates found that people that made specific savings goals saved more than people with vague ideas about “saving more,” but only if they were able to visualize reaching that number in a very specific, concrete way.
The people that only visualized reaching the specific savings goal in an abstract way would get discouraged about the impossibility of the goal. Pick a specific goal and focus on it. Don’t focus on the specifics of getting there all the time. Picture yourself achieving the goal in a very specific way.
Visualize Success Now
When you create that specific picture of yourself achieving your savings goal, make it as close to you as possible. Don’t picture yourself older, in a different house, and wearing different clothes. Picture yourself now (same house, same outfit), succeeding.
Marketers want to make the object for sale physically and mentally closer to you than whatever savings goal you may have. Research shows that it is hard to develop concrete thoughts about things that are far removed from direct experience. Try to draw on direct experiences if possible.
Don’t Buy That First Thing
If marketers can get you to buy just one thing, they’ve got your foot in the door for all the things. If, however, you can focus on your goals and avoid buying that first thing, you have what’s called inaction inertia and you are much less likely to buy the next thing. Put the momentum in your favor.
What is your savings goal? Share specifics what reaching that goal would mean for you.