The following post was provided by fellow blogger Jennifer Willard. If you are interested in being a guest contributor for My Money Design, please feel free to contact me.
Saving money for retirement, or even a rainy day, has become much harder over the last couple of years. Prices for necessities have risen, while income levels have grown stagnant. However, this doesn’t mean that it is impossible to save for the future and learn how to stop spending money. You just have to be a savvier shopper.
Of course, there are always ways to save money when shopping. Using coupons, taking advantage of sales, and even buying in bulk is great ways to save money. But the real trick to savvy shopping and saving money is to understand how retailers trick you into spending more.
How to Stop Spending Money – Watch Out for These Tricks!
There are five common ways that retailers increase your spending without you even knowing. Understanding these tricks will allow you to better manage your money and save for retirement.
High End Products at the Door:
There are two reasons that retailers place very expensive products near the entrance. First, they want you to get into the “shopping mood.” High end, highly-coveted items will place people in the mood to shop, even if it is not to purchase that product. It is the simple response that most people have when they see things they want but cannot afford; they purchase more of what they can afford. The second reason they place these items here is to make you feel more comfortable about the other items you purchase. Psychologically, you can justify what you pay for other products in the store because “it’s not as much as” the items you saw when you first entered.
Common Necessities Priced Low:
Grocery stores will often price common necessities very low to give the appearance that all of their prices are low. Someone purchasing cheap eggs, milk and toilet paper will assume that prices for other goods are just as well priced. In fact, the prices for other common goods will be higher to compensate for the loss on these products.
Three Tier Pricing Displays:
In many different studies conducted by the retail industry, it has been found that most people will purchase the mid-priced object, even if it is not the best value for their money. Retailers often will create displays of items that include a very high priced item, a very low priced or undesirable item, and a mid-range priced item that they wish to push because it has the biggest profit margin for the store. Be very careful when you purchase from displays because you may not find the best deal. Look at the cost per unit in grocery stores and check clothing racks behind the displays for other items that may be of better value.
Customer Reward Programs:
While these programs can be very beneficial, retailers know that most people do not take advantage of the rewards these programs offer. However, people will automatically purchase something, regardless of price, if it adds rewards points to the customer card. If you are going to use a rewards card, make sure that you only purchase what you need and take advantage of the program to your benefit.
One thing that triggers the brain into a relaxed and “ready to spend” mood is the sense of smell. Grocery stores place their bakery or rotisserie near the doors so customers walk into a pleasant smell. Retailers are using scents throughout their stores to create an atmosphere conducive to shopping, such as sweet perfume smells in the ladies clothing section. Be aware of this and avoid overspending just because it smells good.
Readers – What “traps” do you fall for when you go shopping?
Jennifer Willard is a new blogger in the financial community. She writes for her own personal finance blog about her journey out of debt, and her new life as a mother and spender.
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