It's a jungle out there.
Your phone keeps buzzing with text messages from retailers; your inbox is overflowing with Limited Time Only deals. Instagram and TikTok have influencers spruiking their discount codes, and end of year invitations are beginning to pile up, reminding you of all the people and events you still need to prepare for.
With pressure to buy everywhere you look, and your fear of missing out starting to kick in, you need some tips to keep in your back pocket.
That's where we come in.
When spending money hurts your brain, but so does FOMO, how can you come out on top? Here are four insights to arm yourself with before you take on the sales this Black Friday.
Jump to:
- Spending money hurts your brain
- Is your bargain actually a bargain?
- How FOMO becomes buyer's remorse
- Using Black Friday as a tool
Spending money hurts your brain
Did you know that spending money actually hurts?
Research shows that when you part with your money, it activates the region of your brain that's associated with feelings of disgust and pain.
Direct debit and credit card payments hurt the least, and cash payments hurt the most.
To make a payment, your brain has to decide that the benefit outweighs the cost.
Retailers use heaps of tricks to help swing the equation in their favour: making your purchase less painful by offering bundled discounts; adding something 'free' to help nudge you across a payment threshold; or offering delayed or 'pay in 4' payment methods so you defer the pain of payment.
And because the first payment you make hurts the worst, you may be more likely to spend more, on more purchases, once you've made it.
The takeaway? Make your purchase painful to save you money. Your first Black Friday purchase is likely to lead to more, and anything that makes a payment less painful is usually not in your long-term favour, so keep your eyes open.
Don't fall for sale-flation - make sure your bargain is actually a bargain
Sale-flation is when retailers price their stock in accordance with upcoming sales, so they can drop the prices during a sales period, inflate the discount, and convince you you're getting a great deal.
Maybe you've experienced it.
Your favourite brand of chips used to cost $3 a bag, shot up to $8 a bag with inflation, but now goes on 'sale' for half-price at $4.
The practice becomes more widespread during sales periods such as Black Friday, because retailers know there'll be more people hunting for bargains who haven't been paying attention to historic prices.
Don't be one of them.
Consider using tools such as buywisely.com.au, jbbuddy.com, or, for Amazon, camelcamelcamel.com, to check out the price history of an item and see if your bargain is, in fact, a bargain. (We're not affiliated with any of these tools.)
If you see something, say something.
The Australian Competition & Consumer Commission (ACCC) has warned retailers they'll be on the lookout for these misleading and deceptive tactics - and has encouraged the public to report any instances they see.
The takeaway? Just because something's on sale doesn't mean it's a bargain. Check the price history and you'll often find a discount cycle and learn if an item is at its lowest price or not.
Don't let FOMO turn into Buyer's Remorse
Limited-time deals are engineered to make you freak out and spend your money.
The pain of loss is greater than the joy of gain, according to research.
Missing out on a bargain feels like a bigger loss than keeping that money feels like a win.
Plus, sales tactics sneak up on you disguised as news articles, social posts, and email promotions. All the products you've ever wanted seem to flash before your eyes.
Here's the thing about FOMO though.
It makes you overlook:
- Whether you actually need or want the item
- Whether you can afford it
- The terms and conditions should you want to return it
- The money goals you've actually been focusing on
- Whether it really is a limited time promotion, or just a retailer taking advantage of a busy period
So how do you combat FOMO?
Ask yourself, "Did I want this yesterday?" If you didn't need or want the good or service before it went on sale, chances are you don't need or want it now.
The takeaway? FOMO convinces your brain you're actually missing out, which hurts more than doing nothing. But doing nothing is often the smart move.
Use Black Friday to get a little closer to your financial goals
Now we know that we're biologically wired to panic and pay - here are some ways to use that knowledge to our advantage.
One for me, one for future me
If you make a purchase in the sales, consider contributing the same amount of money to your savings or investment account.
That way, even if FOMO gets the better of you, your future self may still come out on top.
Invest your savings
Found a bargain? Let's say you add up all your purchases and find you've saved $300 overall.
If you stick those savings in a high interest account and earn 5% interest per year, that $300 could grow to nearly $500 over ten years (this doesn't account for any fees or charges, and assumes you don't withdraw your money.)
Contribute it to an investment, such as a Spaceship Voyager portfolio or your super, and it could grow even more. (As always, investing is risky and returns aren't guaranteed.)
Switch on Round Ups and Boosts
The life that Future You lives is directly impacted by the choices you make today.
One choice you could make is to switch on Boosts or Round Ups for your Spaceship Voyager portfolio.
This means your spare change or other amount you designate automatically gets invested when you complete certain tasks, such as catching an Uber or spending some money.
Here's how it could work during a sales weekend.
Let's say you catch an Uber to Myer and buy a $75 hoodie for half-price.
Your Uber Boost could invest $5, and your $37.50 hoodie purchase could automatically round up to $38 and invest the 50c difference. That's an extra $5.50 into your Spaceship Voyager portfolio that you probably won't even notice, but will immediately get to work for you.
Over a whole sales weekend, these investments can add up. We think the best part is that you barely notice it. There's no pain of payment but you still reap the benefit - so it's a win/win.
The takeaway? You can use tech to work with your brain so even if you make an impulse purchase, it still counts toward your future.
Go forth and save
Now you have some tools to keep in your back pocket to help you combat the pressure to spend.
After all, avoiding the tricks and traps that lead to buyer's remorse means you're spending and investing your money in meaningful ways, and building the life you actually want to live.
