We know how retailers trick us into spending. Putting more expensive branded goods at eye level in grocery stores. Bombarding us with “too good to be true” deals. Getting to us via our kids through “pester power.”
But did you realize your brain is in on the act, too?
You might think you’re in charge when it comes to your spending, but sometimes your subconscious mind has the steering wheel — and, boy, does it like to shop.
Check out these ways your brain is tricking you into parting with your hard earned cash.
Your subconscious mind steers your conscious thought without you even realizing it. A series of impulses and preconceptions — known as cognitive biases — are the culprit. When they’re in play, you might feel like you’re exercising conscious and logical decision making. But in the cold light of day, your thought processes don’t always stand up to scrutiny.
Anchoring bias is one such cognitive bias which can have an effect on your spending habits. This subconscious quirk is seen in our tendency to rely heavily on the first piece of information we receive. Our brains are wired to pay more attention to the first facts we establish.
So if you are researching a potential purchase online, the first product that comes up in a search automatically creates a frame of reference by which you’ll measure all the subsequent products you see. Retailers know that, making it smart for them to ensure that the first product that comes up on your search is a sponsored ad for a premium product. By establishing your benchmark high, even if you subsequently trade down for your purchase, you probably spend more than you would have if the very first product you found was a real bargain.
Marketing teams know that chances are you’ll be swayed by what others around you do, say, think — and buy. In psychology terms, that’s the “bandwagon effect,” and that’s also why peer marketing and social media are so effective. We are far more likely to trust the advice or opinion of a friend, so if they’re backing a product, then it is likely that we are also — consciously or not — doing so.
The bandwagon effect can also explain why you might get sucked into spending at a level you (and your friends) can’t afford. We see, or hear, about what others are spending, and want a part of it, too. Of course, you might register a twinge of jealousy if your best friend talks enthusiastically about the vacation she has just booked or the great new restaurant she just went to. But the same effect is felt on more subtle things, too. Perhaps you never see unbranded food items at your girlfriends’ places, or you register without even consciously noticing, that they seem to eat out more. The subconscious takes this all in, and it shifts our assumptions about what is normal, and our perception about the standard of living we “deserve.”
This would be fine if we all lived within our means and were honest about the state of our finances. Not so smart when you realize that many of us are out of our financial depths, and we aren’t talking half so much about our credit card debt as we are our new shoes.
Back in the cognitive bias camp, this time it is “survivorship bias” that could be doing your savings some damage. Fundamentally this works because our ability to weigh up the probability and effect of something is influenced by the stories we hear. History is always written by the victors, right? The same is true in all aspects of life.
This matters because what we hear about influences how we anticipate the outcome of decisions we make. We read about celebrities and entrepreneurs living the high life — but don’t hear half so often about people who blow their financial well being seeking celebrity, or on a doomed entrepreneurial venture. The media loves a good story, and the glamorous lives of the rich and famous are certainly more enticing than our everyday working reality.
The message that leaks into the subconscious is that success is easy, even if our logical mind knows that it’s hard fought. So we end up biased to believe that anyone who founds a startup (or buys a pneumatic figure) is destined for good things, skewing our perspective and potentially causing us to take gambles with our financial well being.
Read More: Frugal Tip: Do Not Spend When You Are Sad
The final internal enemy of wealth is salience. This is the way the brain seizes onto the most easily recognizable aspect of an idea or concept.
This helps to explain why the neat and flashy packages of ideas sold to us in advertising messages work. Admen keep it simple and digestible. They want us to believe that if we buy a lotto ticket, we will win; if we go out drinking with buddies, we will be popular; and if we hang out at the mall, we will be cool.
But here, it is not the super smart advertising executives we need to worry about — it is actually our own brains. Even if we are fully aware of the negative impacts of excessive gambling, drinking, or shopping, these are far more complex, and so far more ignored by our subconscious brains. And as it’s our subconscious who’s calling the shots, you can bet that the advertisers’ messages aren’t lost.
Human brains are hugely complex and beautiful things. But even when you think you’ve got yours under control, your subconscious might be lining up your actions long before you’ve decided on them. It can help to get some perspective — often we can see the decisions others make with far more clarity than we can our work. Take a step back before making financial decisions, and see if your conscious brain is aligned with the nagging (and often mischievous) subconscious voice.
Make friends with your subconscious mind, and you will notice when your brain is tricking you into spending cash you can’t afford to splash.