Blogs | December 4, 2018

Snowed under yet still spending? Here’s why (and how) to shore up a budget

Behavioural scientist Garrett Meccariello explains the psychology of snowball spending, and the effect on your cashflow.


Regardless of how well you usually stick to your budget, chances are you’ve experienced a moment of weakness. Whether that moment consisted of giving into temptation while window-shopping or was made despite knowing the consequences, this can harm your long-term financial outlook.

You may have meant well but, in the heat of the moment, things changed. A quick trip to the shops for a single necessary item can turn into a budget-busting spree. One small purchase becomes two, and suddenly you’re rationalising your decision to keep spending money

 If this sounds familiar, you are not alone. Shopping in retail stores under the glitter of bright lights can make you fall into an almost trance-like state. Conditions in these stores make buying the things you want (but don’t need) addictive and hard to control.

Even with the best of intentions, spending can snowball.

Opening Pandora’s box
Snowball spending is when one small purchase lends itself to a second, third, and potentially even more. Each purchase becomes that much more attractive, making it harder to say no.

If you’re spending above your budget, the brain can view shopping just like other addictions – a “forbidden” behaviour that gets all the more attractive the longer you go without. Just as the brain learns to feel good knowing when the next cup of coffee is on the way, it trains itself to release a small dose of feel-good hormones when a purchase is on the way.

If all else fails, set realistic limits on your spending beforehand; this may be your last line of defence if you cannot avoid temptation altogether.

Saying no to an unnecessary purchase can be challenging. Your mind fights with itself over what’s more important, sticking to your budget or getting that jolt of feel-good hormones.

You may even find yourself debating internally: “After all, I’ve already spent some money, what’s the harm in spending a little more?”

In psychology, the thought process known as moral licensing involves rationalising small things like skipping your diet when you’re out with friends if you ate healthier earlier in the week. Snowball spending, on the other hand, doesn’t come with the luxury of healthy behaviour occurring prior to it. Instead, it’s just the opposite (“un-moral” licensing, if you will).

You might tell yourself that buying a second item is acceptable because you already spent some money today, but in reality, if you cannot afford it, it is far from OK.

Stop that snowball roll
The first thing you must do in this situation is separate yourself from the temptation. Removing yourself from the environment makes it that much harder to rationalise additional purchases.

Another tactic is to set the agenda for the day early on.

When heading to the shops to purchase a necessary item, remind yourself that your aim is a specific goal, not a general “treat yourself” experience. If all else fails, set realistic limits on your spending beforehand; this may be your last line of defence if you cannot avoid temptation altogether.

It’s easy to set a few barriers – for instance, by setting a mobile app to alert you when you approach a chosen limit, or by leaving your plastic cards at home when you go out (only taking a prescribed amount of cash).

Snowball spending is a growing problem, often only recognised once the dust settles and the receipts pile up. So next time you find your purchases snowballing, pump those brakes, and stay on course.

ShoppingEmotionPsychology

eZonomics team
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