Let Research Guide Spending Advice

Shopping with friends...literally and virtually.Why do we spend money? Why do we buy things we don’t need or items that are outside of what we can afford? What advice should we heed if we’re trying to improve our ability to walk out of a store with only what we intended to buy?

Some argue that gender, ethnic group membership or socio-economic status alone can explain differences in shopping and spending. Like with other areas of research (including affluent market research), I feel this is all too convenient. For example, one study found that family income (a proxy for class status) had no effect on impulse shopping (Wood, 1998). Instead of helping advisees and other individuals understand how to improve their ability to save money, grouping folks into these easy-to-use categories such as income groups instead provides stale recommendations and developmental suggestions.

Instead, each of us has a unique set of experiences, attitudes, and values about money. And, there are different patterns of these individual differences that might lead to some of us being quite frugal while others becoming more of a spendthrift. These patterns are undoubtedly fueled by our experiences growing up, attitudes about wealth, money, and possessions, and our ability to act in accordance with long-term goals. Likewise, impulse control (Baumeister, 2002) and the inability to judge the impact of spending versus budget are most likely at work, among other variables. Context of shopping matters, too, of course: researchers have found evidence that shopping with friends increases one’s purchases, while shopping with your family might decrease spending (Luo, 2005).

Why we spend money is complex…but is has been and continues to be an area of research that can be applied to helping those who want to save. It would benefit those who provide financial management counseling to visit and revisit the empirical studies examining spending to provide advice based on behaviors and experiences versus assuming a one-size-fits-all approach helping clients and individuals change behaviors.

 

References

Baumeister, R. F. (2002). Yielding to temptation: Self‐control failure, impulsive purchasing, and consumer behavior. Journal of Consumer Research, 28 (4), 670-676.

Luo, X. (2005). How does shopping with others influence impulsive purchasing? Journal of Consumer Psychology, 15 (4), 288-294.

Wood, M. (1998). Socio-economic status, delay of gratification, and impulse buying. Journal of Economic Psychology, 19 (3), 295-320.

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