November 24, 2014

Why Shopping While Feeling Sad Will Cost You

Sadness will wreck your budget and cost you at the cash register

If you're feeling blue, you'll want to think twice about going on that shopping spree. Studies have shown that our mood can have a great effect on how we spend our money. Sadness will likely lead to unwise shopping decisions.

Why This Matters Now

© FatFreddie (CC BY-SA 2.0) via Flickr

Budget-busting season is upon us. A recent Gallup poll says that Americans plan to spend an average of $781 on gifts this holiday season, or almost 11 percent more than we did last year.

To keep your own spending in check and closer to last year’s figures, consider humming a positive-minded tune before you head out the door. As long as it makes you happy (and not groaning over its repetitiveness), a song like “Everything Is Awesome!” could get you in a happier mood and make you a smarter shopper.

Here’s why: A study by psychological scientists at Harvard Kennedy School found that sadness can cause us to become financially impatient, weakening our resolve and leading us to make bad financial decisions.

Sadness and Impatience Make a Poor Combo

© Guian Bolisay (CC BY-SA 2.0) via Flickr

The researchers asked participants to watch a movie prior to making financial decisions. The subjects who watched a sad movie exhibited what is known as “present bias,” which is the desire for the quick fix, the immediate gratification of getting something in the moment. Sadness made participants more likely to dismiss the possibility of earning more money simply by waiting. Instead, they took whatever lesser reward was at hand.

As reported by the Association for Psychological Science, the researchers concluded that “the sadder person is not necessarily the wiser person when it comes to financial choices.” The participants who felt sad were 13 to 34 percent less likely to wait for a greater future reward. Instead, they chose the significantly lesser reward that they could have immediately.

Emotions Get in the Way of Smart Money Moves

Another study, called “Misery Is Not Miserly,” found that when we’re sad, our financial impatience is heightened by an increased readiness to spend more for that immediate gratification.

The thinking goes like this: A sad event causes us to become self-focused and feel devalued. This altered state sends us in search of something to make us feel better and, in turn, skews our valuation of the potential purchases. As a result, we’ll believe things are worth more than they actually are. The deeper the sadness, the greater the effect and the more we’re willing to spend to make ourselves feel better — most likely on items with price tags that don’t match what we’d normally be willing to spend.

See Also: Why Volunteering is Good for You

How This Research Should Change Your Buying Habits

In practical terms, we can use these findings to protect our holiday budget. Taking an emotional inventory before heading out the door is the first step. Feeling sad? Then consider what other holiday-related tasks you can cross off your list before going to shop. Feeling like you got something done could brighten your mood.

Also skip any sad movies around this time of year — save your viewings of The Notebook and Bambi for when you don’t need to play Santa anymore. Instead, enjoy The Lego Movie with the kids before you head into retail wonderland. Chances are, if you sing “Everything Is Awesome” while you shop, your wallet will agree.

Related: Who Else to Tip During the Holidays

More from CreditDonkey:

10 Ways to Finally Avoid Overspending

How Retailers Get You to Spend

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How Gratitude Can Help You Budget

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