When the going gets tough, the tough go shopping’ is true for many because retail therapy, other than the distractions it brings, also improves the buyer’s mood. And when it comes to retail therapy, the Generation X and baby boomers are equally guilty as the millennial. Even if what each generation generally spends on may be different, the fact remains that they derive some kind of happiness linked to using the plastic.
Retail therapy may bring happiness but depending too much on it may actually do more harm than good. It is important to understand the signs of being overdependent and break free. We bring you some help.
Retail therapy
Overspending is a big problem for many. People buy things they don’t need with money they don’t have to impress people they don’t like. Money does buy some kind of happiness for many. The reason behind overspending lies in a number of factors—ranging from behavioural issues to socio-cultural environment and technology. There is a very strong relation between money and happiness, but happiness that is derived from instant gratification does not last long.
Another reason why retail therapy is becoming popular and many are racking up huge amounts of debt because of it is due to FOMO or the fear of missing out. The world has become a smaller place today. An educated 22-year-old in Mumbai today, can see the lifestyle a person his age in New York has. He makes a comparison and aspires to have the same things and live the same lifestyle. And FOMO is doused by the ease of credit available even for fairly young people and first-time borrowers. Payday loans, digital lending platforms, and P2P lending have evolved, so has the penetration of credit card, personal loans, and the like. At a behavioural level, de-linking debt with shame has also made it easy for people to borrow.
Gaining satisfaction
Shopping brings happiness, but going overboard doesn’t. Especially when in doing so, you are raking up huge bills, piling up debt and sacrificing other financial goals to feed your need for instant gratification. Shopping may give momentary pleasure and may seem helpful. Study shows that money buys happiness when spending fits our personality. In other words, when you decide that you are in the mood to spend on yourself, make sure that you go after what fits your personality, and don’t give into the FOMO or peer pressure.
Tipping point
Spending on yourself is healthy as long as you are firmly in charge, but the minute you make a habit of it, your financial life could spiral out of control. There is no criteria to say that beyond this point, it is taking form of a compulsion. But if you keep track of your financial situations, you will be able to see signs of going overboard. Splurging on yourself once in a while and staying within the budget is normal, but when you find yourself frequently shopping, you maybe going overboard. It is not the big ticket spends, but frequent shopping for things like clothes or shoes that can snowball and throw your financial life off-track. If you find yourself maxing out your credit cards, struggling with the household budget or liquidating your investments for spends, you know you are going overboard.
It is true that spending can bring happiness, but make sure that it is not the only source of happiness and desist your dependence on it. There are needs, wants and aspirational spends. And, you should abide by the 50-30-20 rule—50% is for needs, 30% is for wants and 20% is for aspirational spends. Aspirational spends should be the tiniest and, if you find yourself straying away from this rule, you might want to ask yourself why that is the case.
There are a few practical things one can do to avoid reaching the stage of going overboard.
Make a play account, which is a certain percent of your monthly budget and spend the whole amount. And if you exceed, then ask yourself why.
The bottom line
When habits turn into addictions, you don’t gain any pleasure out of it. You do it because you feel the urge to do it. So, if you really want to buy something, buy it and enjoy it. If you can afford it, it is perfectly fine, but if you find that you are shopping just for the sake of it, or for that matter, binge-eat just because food is available, or something similar, there might be a larger problem you need to address. Indulge in shopping once in a while and pamper yourself, but never at the cost of your financial health.