Why You Spend Money

Why You Spend Money

People spend money everyday. You buy items on a regular basis or whenever you need them. Sometimes, you indulge in purchases because you are tempted. Do you keep track of your spending? The fact is that many people do not feel the need to know how much they are spendingand on what items and services. Buying on impulse directly affects planning for your monthly budget.

Read about what influences your spending.

Marketing Strategy

The average individual spends a portion of his monthly income on items he does not need. Why does he do it? The answer is advertising. Everywhere you go, you are bombarded with advertisements and marketing gimmicks. From banners and billboards to television commercials, everything is designed to entice you to make a purchase.

The advertising and marketing industry is worth hundreds of crores of rupees. The industry is geared towards finding ways to convince you to give them your money. They will do whatever it takes to ensure that you buy their product. In most cases, you genuinely need certain products like soap, shampoo, detergent, etc. However, companies are extremely good at getting you to buy products simply by tricking you into believing you actually need them.

Pressure to Spend

Teenagers and children are especially vulnerable to these advertising messages. For these age groups, the marketing strategy plays on their need for acceptance by their peers. They are told that they need a particular product to be cool. Often the strategy involves roping in a well-known figure to market the product. This is doubly effective as the teenager then also wants to emulate his favourite celebrity.

The pressure to keep up with the latest trends can prove addictive for a teenager. As soon as a new product is available in the market, he must have it. A teenager derives his value not from the object itself but from the attention he gets for owning it. Once this attention has faded, he moves on to the next new product. As a parent, you will need to regulate his spending. If you relent and give in to all his demands, you put a strain on your budget plans.

Placement in Stores

Product placement in stores also has a big influence on your spending habits. This is a hidden aspect of marketing and can be viewed in virtually every store you visit. Take a grocery store for example. The items that have the most profit value are always placed at eye level. You may not know this but brand names actually compete with each other to have their products placed in prime position. They are willing to pay large amounts of money to malls and departmental stores for this.

By having a product placed at eye level, the brand is catching your attention before others. It makes you feel as if that product is somehow better than the others, even if it is expensive. This is not only directed at adults. Candy and sugary snacks are almost always placed on the racks close to the floor. This way, they appeal to children who can then plead and beg with their parents to buy the candy for them. Putting your child in the shopping cart is a simple way to prevent them from eyeing the candy.

An entire department store can be set up in such a way that you spend as much as possible. Necessities like milk, cereals, and vegetables will often be placed at different ends of a store. This way you have to navigate through virtually the entire store. While walking down an aisle, the main items are placed in the middle and smaller, less popular items are at the ends. This encourages you to pick up a few extra items here and there. Even the area near the checkout counters is filled with a few impulse buys as a last gasp effort to get you to buy something.

To minimise temptation, draw up a shopping list when you go to the supermarket. Tell yourself you will not purchase anything except what is on the list. When you get to the checkout counter, stay away from the sweets.

Your spending habits are the variable quantity in your budget. If you are aware of how you shop, you can find ways to curtail overspending and save money.