• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Prosper Blog

Personal Loans Home Equity Line of Credit (HELOC)
  • Blog Home
  • Company News
  • Investor Updates
  • Product Announcements
  • Financial Wellness
  • HELOC

Always Over Budget? Dodge These Psychological Spending Traps

April 19, 2019 by Sarah Cain

Spending Traps, Prosper Blog

It happens to everyone. We spend more than we make in a given month, or worse, every month. Sometimes there is a valid reason, such as an unexpected necessary expense like a car repair or medical bill. But too often, there is no apparent reason for our dwindling cash flow. Or is there?

Advertisers and retailers are constantly laying sneaky traps to get us to spend more than we intended and more than most of us can afford. Once you understand the psychology behind these spending traps, you can train yourself to dodge them and keep more money in your own pocket. 

Resist the Emotional Tricks

SafetyNet explains: “Marketers study consumers’ lifestyles and world views to focus on specific psychological triggers.” They appeal to your desire for the latest gadgets and trends, to your fear for the safety of your family or property and to your jealousy of others.

One Psychology of Spending course says, “The challenge is to recognize the emotional appeals being made in most ads and minimize them so you can rationally judge the true value of what is being sold.”

Stop Comparing Yourself to Others

Your friend buys a new car. Does it immediately make you want one too, even though you loved your car up until the moment you saw your friend’s shiny purchase? It’s human nature to envy others, but the need to act on that green monster isn’t a foregone conclusion, even though that is what advertisers and retailers want you to do.

Instead, compare financial situations rather than things. Acknowledging that your friend’s new car is the result of a job change helps you distinguish his purchase as solely about him and not you.     

Make a Shopping List

Whether it’s the grocery store shelves, the 100-store shopping mall, the miles of car dealerships or unlimited online sites, consumers today face an overwhelming number of decisions about how to spend their money. The American Psychological Association points out that this constant barrage wears down our will power to spend our money wisely.

When making big financial decisions, counter that trap by making one financial decision at a time. With everyday purchases, always make a list and stick to it to avoid making impulse buys and saving money on “bargains” that you don’t really want or need. The Chopra Center even suggests rewarding yourself with an inexpensive treat (a coffee) or a free experience (a picnic) for sticking to your list.

Don’t Shop to Soothe

When you’re sad or stressed, do you shop to feel better? If so, you’re not alone. In 2017, Credit Karma surveyed 1,000 U.S. consumers about stress spending and found a significant number of them shopped to deal with anxiety and depression:

  • 52 percent admitted to stress spending when they were in a negative place
  • 43 percent of stress spenders spent at least $200 on their purchases
  • 83 percent of stress spenders later felt a sense of regret about their purchases

That last statistic is solid evidence that retail therapy doesn’t work. In fact, it actually creates more stress, especially if you are buying things you can’t afford.

Limit Credit Card Purchases

According to Psychology Today, “The main psychological force of credit cards is that they separate the pleasure of buying from the pain of paying.” It’s one thing to pay with a credit card in order to earn the cash back rewards if you’re paying off your credit cards every month. But that’s a big if.

Too many of us use credit cards because we can’t afford the thing we want today and we’re not willing to wait until later when we can afford it. Nor is it usually just one item that gets charged, it’s many things—clothing, meals, vacations and more. That all adds up, and even though the pain may be delayed, it often feels far worse and costs much more than paying with cash as you go. 

Distinguish Needs and Wants

The desire for instant gratification has all but obliterated the virtue of patience that our parents and grandparents prized. Between globalization, immediate access to credit and 24/7 online shopping, there is almost nothing you can’t buy today and have in your hands within a matter of days—or hours. All of this ready availability blurs our sense of needs versus wants.

Our last trap buster—with every purchase ask yourself “Do I need this? Or do I just want this?” Items that fall in the former category should be your first priority. Those in the latter are not a priority at all.

Financial Wellness, Prosper Blog, Uncategorized

Primary Sidebar

Connect with us

Facebook Twitter LinkedIn

For press releases and media inquiries: Prosper in the News or [email protected]

Categories

  • Blog Home
  • Company News
  • Investor Updates
  • Product Announcements
  • Financial Wellness
  • HELOC

Recent Posts

  • HELOC vs. Cash-Out Refinance: What’s the Difference?
  • 11 Ideas for What to Do with Your Tax Refund This Year
  • How to Budget Better in 2021 and Why You Need to Start Now
  • Prosper Performance Update – January 2021
  • Filing Taxes: What You Need to Know Before Tax Season

Prosper LoansFollow

Prosper Loans
ProsperLoansProsper Loans@ProsperLoans·
27 Jan

Thanks @lendit for highlighting Prosper an option for non-accredited investors to earn solid returns. https://www.prosper.com/invest
#fintech

LendIt Fintech@LendIt

With @LendingClub's retail #investment platform closed down we went looking for #HighYield alternatives. This is what we found: https://www.lendacademy.com/12-alternatives-for-lendingclub-investors
#FintechNews #FinancialServices
@ProsperLoans @fundrise @groundfloor_com @kickfurther @BlockFi @GoSteward @NSRInvest

Reply on Twitter 1354475897798029312Retweet on Twitter 1354475897798029312Like on Twitter 13544758977980293122Twitter 1354475897798029312
Load More...
  • Company News, Investor Updates, Prosper Blog, Uncategorized
    2020 Tax Guide for Prosper Investors

    It’s tax season, and to help Prosper retail investors navigate the process...

  • Financial Wellness
    Using a HELOC to Pay Off Your Mortgage

    Taking out a HELOC to pay off your mortgage is a common practice among many...

  • Financial Wellness, Prosper Blog
    Emergency Loans With No Job: Options for the Unemployed

    While the unemployment rate in June showed a decline to 11.1%, that ra...

  • Financial Wellness, Prosper Blog
    The Struggle to Access Home Equity: How to get a HELOC During COVID-19

    COVID-19 has drastically changed our lives in many ways — from jobs to...

  • Financial Wellness, Prosper Blog
    Medical Bill Debt: What Happens If You Don’t Pay Medical Bills?

    Even before COVID, expensive healthcare costs had many Americans wondering...

Footer

  • Borrow
  • Invest
  • About Us
  • Press
  • Blog
  • Careers
  • Help Center
  • Contact Us
  • Legal
  • Prospectus
  • Financial Professionals
  • Developers

Prosper and WebBank take your privacy seriously. Please see Prosper's Privacy Policy and WebBank's Privacy Policy for more details. Prosper makes no representations as to the accuracy or completeness of any information provided on this Blog, which is intended for discussion purposes only. Opinions expressed in articles posted to this blog are the author’s own and may not reflect the opinions of Prosper. All personal loans made by WebBank, Member FDIC.

Prosper’s Notes are offered by Prospectus filed with the SEC. Notes are dependent for payment on unsecured loans made to individual borrowers. Notes are not guaranteed or FDIC insured, and investors may lose some or all of the principal invested. Prosper does not verify all information provided by borrowers in listings. Investors should review the Prospectus and carefully consider these and other risks and uncertainties before investing. None of the information provided on this Blog is intended to be investment advice.

Prosper Marketplace, Inc. NMLS#111473 (http://www.nmlsconsumeraccess.org)
All HELOCs are underwritten and issued by our banking partners. Refer to www.prosper.com/heloc for more information. Links to third party sites are provided for your convenience and do not constitute an endorsement.

Equal Housing Lender

© 2005-2021 Prosper Funding LLC. All rights reserved.

Copyright © 2021 · Genesis Sample on Genesis Framework · WordPress · Log in

Go to mobile version