Sales and financial pitfalls. What do these two have in common? Let me give you two hints:
You walk into a retail store advertising 50 percent off store wide sale. You walk out the store after spending $150. Your budget was $80. Although it was over your budget, you did manage to walk out the store with more items for $150 than you could have without the sale.
When reading “financial crisis of 2008 to 2010” what images and emotions come to mind?
What they both have in common is fixation. For the majority of people, our minds are preoccupied with the idea of saving money on a sale and a memorable moment impressed upon our frontal lobe that seems to never fade.
The advertisement of a sale has no advantage unless you are saving money. Typically, we tend to overspend when there’s a sale which makes it difficult to save for retirement or other long-term goals. How many times have you or someone you know have said “oh, it’s only $40” (or another dollar figure) because, otherwise, the item would have never been bought for $80? It doesn’t stop there. Then, there’s something else that you have always wanted (it just happens to be that way because it’s a sale) and buy it. Next thing you know you are buying more than what you have intended. But you justify it because it’s a sale. But it’s up to you to not overspend. We anchor on the idea of a sale and automatically think we are saving money. Au contraire, a sale is an opportunity for the store to sell a higher quantity of their inventory.
Solution: if you want a sale to work in your favor where you are saving money, then set a spending limit. You will stay …» Read more