Each week we ask a question to help you focus on an area of your finances that might need a closer look. This week: What’s something you regret purchasing? AKA, how can you avoid buyers’ remorse?
Buyers’ remorse. We’ve all been there. Every single one of us has a list of things we regret purchasing. The latest iPhone that works just like last year’s iPhone. The pie maker, air-fryer, Thermomix, insert other kitchen gadget here. The must-have September fashion that’s completely hideous come October. The brand new car that was an old car the minute it left the shiny showroom floor.
A very long list indeed.
Buyers’ remorse is what you feel every time you make a purchase that you quickly regret. Owning whatever it is that you bought just doesn’t feel as good as you thought it was going to.
There are heaps of reasons why we spend money on things we regret, but buyers’ remorse is essentially triggered by two psychological factors:
1. Cognitive dissonance
This happens when our brain expects a particular outcome, but experiences another. It’s any situation that makes you feel like you’ve ‘done the wrong thing’. When you make a purchase that doesn’t quite align with your values, cognitive dissonance is the result.
This feeling of unease can also be attached to feeling ‘ripped off’, especially if you spend ages deciding on a purchase, but then find it cheaper somewhere else. Or perhaps the quality of the garment you bought online wasn’t as good as you were expecting.
Cognitive dissonance can sometimes feel like FOMO. Did you make the right decision? Did that person make a better decision? Is there are a nicer pair of shoes out there for me?
2. Paradox of choice
The second psychological factor at play when you experience buyers’ remorse is choice stress.
When you’ve got too many choices, it’s too easy to second-guess the choice that you end up making. Especially (and somewhat ironically), if you agonised over that decision for a long time. The longer you spend deciding, the more stress is attached to the purchase.
Each product you didn’t buy becomes a discarded choice. These discarded choices compound into regret, especially if you perceive flaws (no matter how small) in the item you settled on.
Beat the buyers’ remorse loop
If you’re trying to save money towards a goal, buyers’ remorse can be your constant companion. That’s mostly due to the cognitive dissonance between you the ‘saver’ and you the ‘spender’. Your brain is trying to rack itself around why you’re spending money when you’re supposed to be saving. It can be a bitter loop, but it’s a beatable one.
Here’s a strategy for keeping (most of) your purchases guilt-free.
1. Stop overspending
There’s buyers’ remorse and then there’s foolish spending of money. Don’t confuse the two. If you’re constantly buying stuff you know you ‘shouldn’t, you need to ask yourself why. Take some steps to beat back your shopping habits.
2. Cut up your damn credit card
It’s no surprise that often the things we regret purchasing were purchased on credit. It’s almost impossible to resist the lure of someone else’s money. So, do yourself a favour and get out the scissors. You simply don’t need a credit card – you need regular savings, an emergency fund and a sensible attitude that means you live within your means.
- The three pots saving methods will get you to your goal
- Trickle method saving works even if you can’t be bothered
- 4 steps to break out of the credit card rut
- Do credit card rewards programs stack up?
- 5 steps to build your emergency money stash
3. Buy experiences, not stuff
Research has shown that you’re much less likely to regret purchasing an experience than an object. Experiences basically take the power out of the paradox of choice, because they can’t be replicated. A material item, on the other hand, is interchangeable. There are dozens, if not hundreds, of products just like it out there.
4. Stick to a budget
You’re much more likely to experience buyers’ remorse if you spent money you didn’t really have to spend. When you’re making a ‘big purchase’ it’s really useful to set a budget and not deviate too far from it. This will also help you curb impulse spending, or buying things to ‘keep up with the Joneses’. Always remember: the Joneses own so much stuff, they’re actually broke.
- How often do you stick to your budget?
- Which budgeting methods are the right ones for you?
- How to plug financial leaks in your budget
- 15 simple ways to save stacks on your groceries
- 10 killer budgeting strategies
5. Know your true values
If cognitive dissonance is the result of being out of line with your values, it pays to know exactly what those values are. Psychologist Barry Schwartz, author of The Paradox of Choice, suggests that you’ll make better buying choices that way. His framework for avoiding buyers’ remorse looks like this:
- Figure out your goals
- Evaluate the importance of each goal
- Pull together the range of options
- Evaluate how likely each is to meet your goal
- Pick the winning option
- Modify your goals
In the case of making purchases, it all starts with knowing exactly why you need to buy the thing in the first place. That’s often enough to stop you in your tracks. Do you really need a new jacket? A fancy car? The latest technology? Chances are, there’s really no good reason to buy any of these things.
- How to set your financial goals
- Knowing your values can help you manage your money
- 10 steps to achieve your financial goals every time
Find the rest of our Money Focus series here.