Sydney Sekese, CFP® professional and member of the Financial Planning Institute
The day finally arrived and quickly disappeared. By the time you read this article, most consumers would have stood in long queues for Black Friday bargains. The effects of excessive spending during this period could be likened to a hangover. Just like a hangover feeling, impulsive and excessive spending could result in various unpleasant physiological and psychological effects. This year, most retailers extended their black Friday offers by more than a day. I suspect that this created a sensation and excitement for consumers to continuously spend under the “discounts” banner.
Compulsive spending, sometimes called compulsive buying disorder or oniomania, is spending far beyond what is necessary. Though it often causes financial harm, people of means may engage in compulsive spending without suffering serious financial disaster.
Most causes for compulsive shopping are psychological. Generally, a person will be having emotions of loneliness, depression, feel out of control in a particular area, and seek to spend money in order to relieve the stress. The Covid-19 induced environment could have seen some consumers experiencing these emotions. Black Friday could have come as a remedy.
But how do you fix or avoid future Black Friday hangovers? The best-selling author and motivational speaker, the late Dr Myles Munroe, once said that “tradition is a great enemy of change”. Readers are encouraged to review their attitude towards money and review their tradition of how they handle money during seasons like these.
You should be wary of spending money that you don’t have. Spending all your money to make yourself look good is lame. A local legend states that too many people buy things they don’t need, with money they don’t have, trying to impresses people they don’t even like.
There are a few tips that you could adopt to keep you from overspending:
Shop with a List
Before you go shopping, make a list of what you need to buy. Then, when you get to the store, don’t deviate from this list. Sticking to a shopping list will help prevent “impulse” purchases, stop you from buying things you don’t really need, or shopping mindlessly. Being more conscious what you’re shopping for will help you avoid overspending.
Stick to Cash
Credit and debit cards are very easy to use, which makes it easy to overspend. Credit cards especially can lead to issues, since they allow you to spend money you don’t have. If you’re prone to overspending, consider living on cash. This way, you can only spend money that you have already earned.
Take Time to Cool Off
When you see something interesting in a store or online, it’s tempting to want to buy it right away. This is especially true if the item is on sale or something you don’t see very often.
Take a walk around the store or the mall. Close the website. Really think about the potential purchase and whether it fits into your budget.
Don’t Shop Socially
A lot of people shop for fun or for something to do with their friends. Instead, it’s a good idea to try and come up with some free activities. If you sit down and think about it, you’ll realize that you don’t need to spend a lot of money to have a good time. Taking a walk with friends can be a good alternative to going on a shopping trip, for example.
Plan Your Treats
Save up for treats and splurges. This gives you something to look forward to and provides you with a reward for staying on budget. Plus, if you know you’re going to be able to treat yourself next week, you’ll be less likely to do it today.
Another festive season awaits most consumers. Shop down or delay big ticket items (cars and houses) and squash those mid-sized debt accounts. It’s going to get tougher out there considering the low growth environment and the downgrades recently penned down by the rating agencies. A slight relief is the expected 27cents drop in petrol price in December while the Rand is currently stronger than the Dollar compared to a year ago.