BREAK
THE OVERSPENDING CYCLE!
Holiday
music is now playing on the radio.
Shopping malls have their decorations displayed. Retailers
have become increasingly sophisticated in their methods of parting consumers
from their money. In grocery markets, shops have used a range of techniques to
create the right conditions psychologically for consumers to buy what the
retailers want them to buy. The aroma of freshly-baked bread is often
wafted through a supermarket in order to stimulate demand for products from the
in-store bakery, or just to make shoppers feel hungry. Holiday items are out to make you want to buy
them now and for the next several weeks.
They encourage overspending.
Shopping
is a major leisure activity. Try asking many people what they like to do in
their spare time, and you can guarantee that a large number of them will
nominate a trip to their local mall. Why is this? What do we get out of the
shopping experience? Is it all about the therapeutic benefit of buying a
product or service that we desperately want? Or are other forces at work when
we enter the shopping center? Let's look at some standard techniques which have
long been seen as successful in retail markets.
·
Pricing at psychologically sensitive points,
for example at $29.99.
·
Products identified by the retailer as impulse
buys are placed at the ends of aisles
·
Store-brand products are positioned alongside
premium brands, often leading to consumers buying a cheaper- choice, Store-brand
item rather than a premium priced one
·
Stacking the products with the highest margins
at eye-level.
What can you do to avoid overspending this holiday
season? First of all, realize you are
not suddenly bringing in more income.
You do not want to be paying bills in January, so decide how much you
will be spending, write out a gift list, and stick to it! If you are an impulsive shopper, decide to
just spend cash. (That’s right, no
credit cards!) Try this for just a week, you will be surprised by how
disciplined you become!
Here are some quick tips that I have used myself. If you have small children and your relatives
tend to spoil them, suggest that they deposit money into a college fund for
your child, and just give them a small, inexpensive gift. Trust me, my teenagers appreciate this now!
Use your credit card points to buy gifts. We gave our daughter a camera from our points
one year, and my son will get an I-pod this year. I will not spend a dime, I will use my credit
card rewards.
If you feel obligated to buy gifts for acquaintances, but
you are not sure what to give, home baked gifts are inexpensive, and very
thoughtful.
Do not give in to the “shopper’s high” this year and break
the short term cycle of overspending.
Starting December 26th, start a holiday account at your
bank. This will be your gift to you!
Jill
Gleba
Wealth
Manager
Gleba
& Associates
248.879.4510
Jill@glebaandassociates.com or
Many of you have been kind enough to write to me with your
questions. Please feel free to keep
doing so; we may use them in a future column to share and help others.