According to the National Retail Federation, retail stores receive anywhere from 20-40% of their annual profits during two key months out of the year: November and December. So it’s no surprise businesses will go to great lengths to ensure their stores are full and sales are booming.
For you, the consumer, this means navigating shark-infested shopping waters where prices might not be what they seem and the emotion behind the season can play a part in how much pain you feel in your budget.
Before you embark on your holiday shopping, beware of how retailers can push you to spend more in order to bolster their bottom line.
No Interest Credit Cards and Layaway
If we were required to pay for all of our holiday shopping – from gifts for our kids to gifts for our coworkers – in one large lump sum, most of us would gawk at the price tag. Many budgets can’t handle that type of pressure.
Enter layaway. Instead of thinking of the total cost of your holiday shopping, you’re able to pay in smaller installments over a longer period of time, giving you the false impression that your budget actually can withstand that heavy spending.
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Another offer that seems to benefit the consumer are the low or no interest credit card offers extended upon checkout. Why not charge your purchases and think about the bill later?
Unfortunately, thinking about the bill later often means you allow your spending to be higher than normal and, if you don’t pay the full amount within the interest free period, the interest charges could become retroactive. The fine print is simply never as welcoming as the first offer.
Speaking to Your Heart
While it might still be challenging to stick to a budget the rest of the year, the holidays give us something else to contend with: feelings of nostalgia and the desire to connect with those we love.
Stores know how profitable these emotions can be, and make sure to create an environment in which we can really feel the holiday spirit. They play holiday music, decorate from floor to ceiling, and advertise in such a way that makes spending more seem like the best way to enjoy this time of year. Suddenly our wallets appear to be a little deeper than they actually are.
Kiplinger explains that, according to experts, even our noses can be manipulated.
“According to the Scent Marketing Institute, we’re likely to browse longer in stores with floral or citrus scents, to feel secure and nostalgic when we smell talcum powder, and to feel relaxed when the scent of lavender or vanilla is wafting.”
Promises of Sales and Discounts
When you consider the hoards of people that will skip their Thanksgiving meal in order to camp out before Black Friday sales, it’s clear that retailers are doing something right.
But just because something is labeled as a deal, doesn’t make it so.
“Retailers count on buyers’ cognitive shortcuts to spur sales. A recent study showed that when shopping in a store, by catalog or by website, people are likely to spend more when they see high prices around them, on items completely unrelated to what they want to buy. And merely setting prices with the number nine at the end, whether it’s $1.99 or $99.99, can make consumers feel they got a good deal.”
The urgency of holiday sales pushes purchases like very few things can – and it’s all too easy to let the emotion get the best of you.
Tips for Combating the Urge to Spend
Before you hit the stores this holiday season, apply these tips to ensure your budget emerges unscathed.
If you are one that allows the holiday spirit to dictate your spending, you might want to avoid the malls altogether. Instead, shop at online where you can make purchases based on what you’re looking for and nothing else.
Limit Your Shopping Time:
There’s nothing that can bust your budget like giving yourself ample time to shop and no list to work from. Instead, shop in a limited window of time with a clear idea of what you’re there for. Take it a step further and shop alone – experts say this can cut your shopping time substantially.
Pay Attention to Prices:
When you have no frame of reference for how much something should cost, it’s easy to jump on the first sale sign that you see. But knowing how much an item normally is and what different stores are pricing it at can help wade through the Black Friday propaganda.
How do you plan on sticking to a budget this holiday season?