Regular shopping is a minefield of financial decisions filled with hidden forces and emotional traps which lead us to make poor choices… every, single day. When the holiday season arrives to pile on even stronger emotions, not to mention high-pressure sales, family concerns and countless stressors, our decision-making becomes more compromised and the money missteps pile up.
Jeff Kreisler is a behavioral science professional, bestselling financial author, and award-winning comedian. I had a chance to interview him to get practical, science-based solutions to regain control of holiday spending right now.
What are some common holiday shopping mistakes?
The most common holiday shopping mistake is falling for “SALE!” prices. Sales excite us, triggering a powerful emotional response when we think we’ve discovered the “right” choice. Sale prices allow us to escape the hard choice of valuing a purchase by giving us the easy choice of simply comparing two options: the sale price and the “regular” price. A $60 sweater seems like a great find compared to the $100 sweater it was before the 40% off sale. But we shouldn’t be comparing those two items, we should instead be asking “is this sweater worth $60?” That’s a harder question to answer, so we go for the easy trigger of the sale price every time.
Another mistake is not sticking to a budget. We humans are pretty good at self-justification for veering off of even the best laid plans. “Oh, I’ll just have a little bite of this cake, it’s not that big a deal… I’ll work out and diet next week.” Same with spending. “Oh, I’ll just get my nephew the Death Star Lego to go with the other Star Wars stuff… it’s just a little more… I’ll make up for it elsewhere.” We often buy a lot of gifts for a lot of people during the holidays – from family to friends to coworkers – and when we go over our budget “just a little bit” for each one, the total adds up quickly.
And, of course, thinking gifts are the only way to represent love and meaning can get us into a downward spiral of spending chasing spending, as can trying to match what we think other people are spending on gifts for us or our common friends.
Why do people fall into these mistakes so easily?
Because we’re emotional creatures, financial decisions are filled with stress and uncertainty. We’re prone to fall into traps and shortcuts and biases which satisfy our immediate emotional needs: “Yes! I got a deal!” “Phew! I got something for my mother-in-law!” “Alright! I got the thing I’ve heard everybody’s been trying to get!” The holidays – family, travel, spending, end-of-year life assessment – just add to the stress, uncertainty and emotions which short circuit our best intentions and lead us astray time and again.
Please note: EVERYONE makes money mistakes, even the experts. It’s okay. You’re not alone. You’re human. You can’t change being human… but you can start to recognize the traps you fall for and find systems to make better choices.
How can people make smarter shopping choices around the holidays?
Budget: Make one when you’re in a “cool state” – i.e. not thinking about certain people or inundated with sales pitches – and stick to it! Find an accountability partner to keep you in check if you can’t do it yourself.
Watch those “sales”: Think about what you’re actually spending, not what you’re imaginarily “saving.” Remember: You’re not actually saving money, you’re spending it.
Imagine the future: How will your gift really impact the person who receives it and his or her relationship with you in a month, six months, a few years? Try to maximize that value instead of maximizing the price tag on a gift that, along with the giver of the gift, might soon be forgotten.
About Jeff Kreisler
Jeff is a Princeton educated lawyer turned award-winning comedian, best-selling author and champion for behavioral economics. His second book – Dollars and Sense: How We Misthink Money and How to Spend Smarter was co-authored with Dan Ariely and is available in over 20 countries. It was dubbed Best Business Book of the Year by Business Insider, Huffington Post, Audible, and the Washington Post ("A brilliant and accessible look at behavioral economics").
Jeff is the Editor-in-Chief of PeopleScience.com, a new thought-leadership platform for applying behavioral science to the modern marketplace. Kreisler won the Bill Hicks Spirit Award for Thought Provoking Comedy, has appeared on CBC, CNN, FoxNews, MSNBC, Current TV, Sirius/XM and has toured the planet speaking about behavioral science.
Jeff uses behavioral science, humor and real-life experiences to understand, explain and change the world.
His first book, Get Rich Cheating (Harper Collins) was published in 2009 to rave reviews.
Jeff has been featured on numerous outlets:
- CNBC Grow video, The pain of paying
- TED blog, Sales
- The Wall Street Journal, Foolish spending
- The Washington Post, Couponing
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