The psychology of splurging

Dear Debt Adviser,
Do you have any statistics on spontaneous consumer-spending behavior? Why do we spend the way we do?
Tony

Dear Tony,
I'll be with you in a minute; I just have to finish a purchase on the Internet! Sorry, only kidding. Really, this is an excellent question. Understanding what motivates you to spend is half the battle of controlling overspending. The other half is understanding that others use motivation in subtle ways to get you to buy what they want you to, not what you want to!

With that said, America has a consumer-driven economy. Approximately 60 to 70 percent of the total economy is a result of consumer spending, and about 40 percent of that total goes toward discretionary products and services.

To attempt to answer your question about why we spend the way we do, let's take a look at some of the psychology of spending money. Experts have identified several justifications that we use to spend. Among them are: pleasure, stress relief, overcoming feelings of inadequacy, entitlement, and one of my personal favorites -- showing everyone just how important we really are. It is worth exploring your attitudes about money to help better understand why you spend the way you do.

The other half of the equation is that retailers know all this, plus they know what music and colors enhance the buying experience, where little kids' eye levels are and that if you have to walk through the entire store to get what you want, you are likely to buy more along the way. In short, they have a "plan" for your money. If you don't, then you are at a serious disadvantage.

So what is the lesson here? Get a plan of your own! A spending plan can be simple or complex: You choose. Just get one or you'll forever be at the mercy of those who do.

Below are a few other tips to help bring reality into your spending life.

• Uncomfortable about a purchase? Walk away, especially if it's expensive, for at least an hour. The pause helps put that purchase in perspective. If you still want the item and can afford it, after waiting, only then consider purchasing it.
• Beware of excess passion in a purchase. You may be better served to cool things down before you plunge.
• Consider how long you will have to work to pay for an item. Is it worth a week or even a month's toiling away on the job to purchase?
• Take into consideration the motivations behind your desire for the item. Could you fulfill that desire in another way?

The bottom line, Tony, is that Americans will continue to spend and our economy depends on that fact. My hope is that we learn to spend wisely and avoid the overspending that causes such stress for too many American families.

The Debt Adviser, Steve Bucci, is the president of Consumer Credit Counseling Service of Southern New England. Visit CCCS for additional debt advice or click here to ask a debt question.