We’ve all heard this saying: “Insanity is doing the same thing repeatedly, but expecting different results.” That wisdom is especially relevant when it comes to shopping and spending. Whether it’s leaving grocery coupons on your kitchen counter, falling for a sneaky sales pitch or swiping your credit card for something you can’t afford, how often have you kicked yourself for committing the same financial folly again and again?
Mistakes and failures are key to personal growth, but this is a tough sell when you find yourself repeating them. To help you avoid the pain of yet another money mishap, here are the top shopping mistakes today’s consumers make and how to overcome them.
[See: 10 Money-Saving Websites to Check Before Shopping.]
1. Buying more to save more. Tiered savings or “buy more, save more” promotions purport to offer the most value to the biggest spenders. They often persuade consumers to spend more to receive the larger discount. However, buying more is just that — buying more. If you only intended to spend $50 and you receive a $10 discount, consider it a bonus and pocket the savings. In some cases, the percentage of savings is the same: $10 off $50, $20 off $100 and $50 off $250 all represent 20 percent savings, so spending more does not actually net you “more” savings.
Online shoppers can also spend more than they planned to save on shipping fees. A delivery charge of $8 to $12 prompts many consumers to add items to their online carts until they reach the minimum threshold to receive free shipping. However, if these are not products you need, and they cost more than the shipping fee, it’s a waste of money. Instead, see if you can take advantage of a free ship-to-store option, or delay your purchase until a holiday weekend, when many retailers reduce or waive minimum thresholds to increase traffic.
[See: 12 Ways to Be a More Mindful Spender.]
2. Giving into impulse buys. Between television, the internet and social media, Americans are exposed to numerous advertisements every day, a reality that helps blur the line between “wants” and “needs.” Advertisers do a great job of justifying whatever purchase they’re trying to push, but consumers have to stay strong. If an impulse strikes you, it’s also helpful to “sleep on it,” or require that a certain amount of time passes before you make the purchase. More often than not, the urgency dissipates along with the desire to make the purchase.
3. Opening credit cards for a one-time discount. The siren song of discounts is hard to ignore, especially when they’re offered on items you plan to buy anyway. Such is the strategy of store associates offering discounts of 10 percent to 20 percent when customers open a retail credit card. Shoppers are a captive audience at this point in the transaction, having emotionally committed to making the purchase. Despite the temptation, opening a store credit card is something you should almost always avoid. Having a store card can compel you to spend more at the retailer, especially when doing so helps you accrue rewards and other discounts. What’s more, retail credit cards often have low credit limits and high annual percentage rates, and can negatively impact your credit score if you open several new cards within a short time frame. Instead, stick to your bank credit card for retail buys and find other means to save money on your purchases, like coupons and discount gift cards.
[See: 12 Habits of Phenomenally Frugal Families.]
4. Depending on plastic. American consumers’ dependence on plastic is well-documented, with NerdWallet’s 2016 American Household Credit Card Debt Study finding the average credit card-holding household owes more than $16,000 in credit card debt. Cumulatively, that’s $747 billion. What’s more, those households with revolving credit card debt have an average balance of $6,885 and pay more than $1,200 annually in interest alone.
These numbers are staggering, yet not altogether surprising given how easy it is to swipe now and pay later. If your credit card debt is a black mark on your household budget, commit to using credit less until you pay off the balances. This may mean switching to an all-cash budget for discretionary purchases and finding the means to double or triple your credit card payments until balances are paid off.
5. Signing up for retail newsletters. Signing up for a store’s newsletter is great strategy for saving up to 20 percent when you’re ready to make a purchase. However, that new-member coupon is quickly followed by a storm of tantalizing emails encouraging you to “hurry and shop now” before sales and discounts come to a close. This creates a sense of urgency that leads to impulsive spending. To avoid this, unsubscribe once you’ve received the initial discount to avoid further temptation.
6. Spending money as therapy. Though “retail therapy” is a popular justification for dealing with boredom, depression, frustration or a host of other emotions, it perpetuates a cycle of spending that will eventually cause you more stress. Identify your triggers for spending mindlessly and come up with alternative, spend-free ways to deal with them.
If you simply must get out and browse the latest must-haves, exercise the practice of window shopping by leaving all payment methods at home and keeping your purchases hypothetical. If you do find items that you desperately want, create a list of these products along with their prices. At the end of the month, add up how much money you saved by avoiding these purchases, and consider what financial goal you can now fund as a result of your self-control.
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Stop Making These 6 Common Shopping Mistakes originally appeared on usnews.com
